The Wall Street Journal reports that the bankruptcy filing by California value retailer Mi Pueblo appears to be at least partially related to a federal immigration audits that led to the company being ordered to replace a number of its 3,260 employees with questionable documentation.
According to the story, Mi Pueblo said "in court papers that the federal audit led the company to struggle with higher payroll costs and training expenses as new workers have been brought on board."
Those higher costs led to Mi Pueblo encountering problems with its banker, Wells Fargo, which then resulted in the bankruptcy filing.
This reportedly isn't the first time that a federal immigration audit led to a retailer filing for bankruptcy protection. Essentially the same thing happened to Arizona's Pro's Ranch Market, while filed for bankruptcy when it had to "lay off 300 workers - roughly 20% of its workers - in 2010 following an agency investigation that found some employees to be working in the country illegally."
The story notes that "companies face fines for knowingly hiring and continuing to employ workers that can’t produce valid work papers."
According to the story, Mi Pueblo said "in court papers that the federal audit led the company to struggle with higher payroll costs and training expenses as new workers have been brought on board."
Those higher costs led to Mi Pueblo encountering problems with its banker, Wells Fargo, which then resulted in the bankruptcy filing.
This reportedly isn't the first time that a federal immigration audit led to a retailer filing for bankruptcy protection. Essentially the same thing happened to Arizona's Pro's Ranch Market, while filed for bankruptcy when it had to "lay off 300 workers - roughly 20% of its workers - in 2010 following an agency investigation that found some employees to be working in the country illegally."
The story notes that "companies face fines for knowingly hiring and continuing to employ workers that can’t produce valid work papers."
- KC's View:
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It is hard to work up too much sympathy for what seems to be blatant violation of the law, though it has to be said that we certainly have to do something about an immigration system that appears to be completely broken. I feel bad about the bankruptcies, but they knew what the law was, and what the penalties were.
