Lynn Tilton Goes to Washington - Bankruptcy Beat - WSJ

 

 

 

October 15, 2009
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As chief executive of a private-equity firm that invests in distressed companies and works to turn them around, Lynn Tilton knows a thing or two about rolling up your sleeves and getting down to work to solve a problem. But Tilton, whose Patriarch Partners LLC has plucked up struggling companies both in and out of bankruptcy, says the weak economy and rising unemployment rate warrant something more than what she’s already doing every day.

“Saving America one company at a time, one job at a time is not enough,” Tilton said Thursday morning at the National Press Club in Washington, D.C., where she pitched a new public-private investment program that aims to fill the capital void she says small and middle-market companies are current facing. (You might recognize Tilton and Patriarch from the bankruptcy cases of fire truck maker American LaFrance and as the failed buyer of Polaroid; Patriarch also owns retailer Spiegel and make-up brand Stila.)

Arguing that job loss is not only causing “true hopelessness” throughout the U.S. but is dooming our chances of a true economic recovery, Tilton said her proposal seeks to save small to mid-size companies from liquidation. As major employers – Tilton’s figures suggest that together they employ about 80% of the U.S. workforce – she believes that giving these businesses the working capital they desperately need and currently aren’t getting will ensure there’s a company left to hire back workers and to spur the economy’s recovery. Otherwise, she said, companies are gone forever, and laid-off workers have “no place to go back to” in their shrunken industries.

You can read about her proposal here, but to quickly summarize, it would tap unused funds from government’s Troubled Asset Relief Program already set aside for the public-private investment programs like the one she’s pitching. Private investors would take more risk than the government in order to protect taxpayers. Tilton said she’s discussed her proposal with Treasury officials and with members of the U.S. House and Senate and is now “ramping up” her advocacy. She said while there’s been concern about the political ramifications of her proposal, there’s been “no pushback” to the goal of stemming job losses and creating new jobs.

Despite Tilton’s 28 years of private-equity and other financial experience, she claims a special understanding of Main Street and the “anger” and “resentment” that currently lurk there.

“I walk around this country. I walk through the manufacturing towns. I speak to people,” she said. “Although I’m considered a Wall Street woman, I’ve long seen the world from a perspective much distinct.”