Rockford Toys-R-Us Employees May Have Money Coming Soon
Chicago Tribune is calling this "a new precedent for private equity-backed companies that file for bankruptcy", because former Toys-R-Us employees could soon be receiving severance payments thanks to the millions the company's owners set aside during the bankruptcy filing process.
According to the Chicago Tribune;
Bain Capital and Kohlberg Kravis Roberts — two of the three firms that bought Toys R Us in a 2005 leveraged buyout and loaded it with billions of dollars in debt before liquidating the chain in June — are setting aside millions of dollars in a fund to be distributed to retail workers, according to a person involved in the negotiations who spoke on the condition of anonymity...
The workers are owed $75 million in severance pay, according to worker advocacy group Rise Up Retail. Prior to the bankruptcy, Toys R Us had guaranteed its workers two weeks of severance for their first year of service, and one week of pay for every two years on the job after that.
So why is this such a big deal for everyone else, and not just former Toys-R-Us employees? Carrie Gleason, campaign manager for Rise Up Retail, told the Trib;
This win at Toys R Us is part of a bigger movement of workers and families fighting back to hold Wall Street accountable for the investments that they make. Bain and KKR made an investment that resulted in a lot of harm for families and communities, and the responsible thing to do is step up and pay workers what they are owed."
With national, brick-and-mortar stores dropping like flies these days, maybe forcing businesses to keep the promises they make to employees could help ease a bit of their worries.