Who Pays When VC Firms Dump Debt into Retirement Plans?

On July 3, 2025, United States President Donald Trump signed an executive order directing the United States Department of Labor and the United States Securities and Exchange Commission to permit access to alternative assets in retirement plans. This includes venture capital, private equity, hedge funds, real estate, and cryptocurrencies. This move was applauded by financial giants who now see 401(k)s and Individual Retirement Accounts (IRAs) as an untapped bailout fund.

We see something else entirely. In our view, this executive order is a warning. The system is collapsing from within, and retirement savings could be the next exit mechanism.

Venture capital and private equity firms spent years acquiring companies through leveraged buyouts, borrowing heavily during the era of near-zero interest rates. They placed aggressive bets on unprofitable startups, fueled by speculative valuations and cheap floating-rate debt.

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This model functioned while borrowing was cheap. As interest rates climbed past 5 percent in 2023 and 2024, refinancing became a death sentence. The valuations, built on revenue multiples and “growth-at-any-cost” narratives, began to fall apart. The result was widespread distress, liquidity shortfalls, and a surge in bankruptcies.

Here are a few examples from 2024 to early 2025:

• Hooters of America, LLC: Filed for Chapter 11 bankruptcy on March 31, 2025, under approximately $376 million in debt, including securitized liabilities.
• Joann: The craft retail chain filed for Chapter 11 for the second time, unable to survive debt burdens from leveraged buyouts.
• Instant Brands: Known for its Instant Pot and Pyrex, it became the subject of scrutiny for dividend extraction and financial engineering.
• Red Lobster, TGI Fridays, Claire’s, Toys “R” Us, and Sears: All collapsed under the weight of private equity debt.

According to the Financial Times, over 110 private equity and venture capital-backed firms filed for bankruptcy in 2024. PitchBook’s Q2 2025 Global Private Capital Report notes that $3.6 trillion in unrealized value is now locked in illiquid holdings across nearly 29,000 companies.

The State of Private Markets Q1 2025 by Carta shows 19 percent of all venture funding rounds were down-rounds. These valuation declines expose the fiction that has propped up many tech firms and consumer brands over the last decade.

According to Business Insider, venture fundraising has dropped to six-year lows as limited partners delay or default on capital calls. The music has stopped. The chairs are disappearing.

The United States retirement market holds over $23 trillion. With public markets hesitant and private investors tightening their wallets, venture capital firms appear to view your 401(k) and IRA as the last untapped pool of liquidity.

In our view, this is not about improving access. It is about managing and offloading risk.

Newly packaged “alternative investment funds” will likely offer slices of these distressed assets. These funds may be labeled as diversified and innovative. In practice, some may function as mechanisms to shift underperforming assets into passive vehicles where transparency is limited and accountability is nearly nonexistent.

These are not stocks you can sell. These are not bonds you can easily track. These are illiquid, mark-to-model holdings that may be difficult to exit without significant loss.

This executive order sets a precedent. Historically, regulatory shifts in the United States echo across the United Kingdom, European Union, Australia, and other Western allies. Pension systems abroad, already under pressure from demographic shifts and underfunded obligations, may adopt similar practices.

This is not merely an American story. It reflects a broader crisis across the Western world. One defined by overleverage, distorted valuations, and financial engineering.

Many of the companies now facing collapse were never worth what the balance sheets claimed. Their valuations were inflated through internal rounds, superficial metrics like total addressable market, and unsustainable growth spending.

Now that the cost of capital has returned to historical norms and exit opportunities have dried up, the truth is being revealed. In many cases, the only play left is to push these liabilities downstream onto unsuspecting workers.

We believe in owning real assets. Gold and silver are not projections. They are not promises. They do not rely on exit velocity or debt rollovers.

They are finite. They are tangible. They are sovereign.

When financial assets are engineered into illusions and retirement savings become the final dumping ground, owning precious metals is not just strategic. It becomes necessary.

At our firm, we assist clients in structuring wealth by Owning Assets in Order of Asset Security. We prioritize the most secure assets and safeguard those that are most vulnerable.

Book your complimentary review to learn how to structure for the shifts ahead.

This executive order does not appear to be a pivot toward opportunity. It may be an engineered escape hatch for venture capital. If left unchecked, it could transform retirement plans into bailouts for collapsed business models.

There is a way forward. It begins with awareness. It ends with sovereignty.

In our book It Starts With Gold™, we reveal how public policy, global debt cycles, and digital assets are converging in ways that threaten your financial future. We also explore the tools that can help you protect what matters.

To learn more, visit www.ItStartsWithGold.com.

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1. Reuters – Hooters of America files for Chapter 11 bankruptcy
2. Restaurant Dive – Hooters files for bankruptcy as locations close
3. Financial Times – More than 110 private equity-backed companies filed for bankruptcy in 2024 (Note: Content behind paywall. Data cited from summary figures.)
4. PitchBook – Q2 2025 Global Private Capital Report
5. Carta – Q1 2025 State of Private Markets
6. Business Insider – Venture capital fundraising hits six-year low as LPs pull back
7. Wikipedia – List of private equity firm bankruptcies (for historical background)
8. Reddit – Discussion on private equity collapses (user-sourced thread) (discussion only, not a primary source)