The once-trendy, San Francisco-born coffeeshop chain Philz Coffee has struck a deal to be sold off to a private equity firm for $145 million, but any employees who bought stock are getting the shaft, as they won’t see a penny of that money.
The article doesn’t say so but it might be part of bankruptcy proceedings or something similar. The company is sold off to pay debts but there isn’t enough money to pay everyone, debts are paid off in a legally determined order, and stock or option holders aren’t near the front of the line. I know folks who worked for First Republic and lost all their stock and options (and accrued vacation time, which is also apparently a debt) like that.
That’s right, the bond holders get paid first because those are loans. The preferred shares get paid next because those are basically higher yielding bond equivalents.
*There are usually laws that the first debt in line is unpaid wages. I’m surprised that vacation time wouldn’t be included in that. Employees’ stock and options though are the same as any other stock: worthless.
How does this work, and how is it legal?
In usa laws only protect rich people
The article doesn’t say so but it might be part of bankruptcy proceedings or something similar. The company is sold off to pay debts but there isn’t enough money to pay everyone, debts are paid off in a legally determined order, and stock or option holders aren’t near the front of the line. I know folks who worked for First Republic and lost all their stock and options (and accrued vacation time, which is also apparently a debt) like that.
That’s right, the bond holders get paid first because those are loans. The preferred shares get paid next because those are basically higher yielding bond equivalents.
That’s the only way this makes sense.
*There are usually laws that the first debt in line is unpaid wages. I’m surprised that vacation time wouldn’t be included in that. Employees’ stock and options though are the same as any other stock: worthless.