Former employees of the now defunct Toys R Us will now be receiving severance, CBS News is reporting. Many have campaigned for months in support of the over 30,000 Toys R Us employees who are now out of a job since the company — and 735 stores around the nation — shut down. Fortunately, Bain Capital and KKR, two private-equity firms, have set aside $10 million each to fund the severances. Bain Capital and KKR are two of the three companies who took control of the company in a $6.6 billion buyout in 2005. Reportedly, severance will start at $200 and can go anywhere up to $12,800.
“We are glad that KKR and Bain have decided to create this fund to help thousands of families in time for the holidays,” said Carrie Gleason, Organization United for Respect’s campaign manager of Rise Up Retail. Rise Up Retail is known for advocating for worker’s rights.
“The fund needs to grow to make these families whole,” Gleason pointed out. To stay true to the policies in place at Toys R Us for decades, the fund needs $55 million more to properly pay severance to former employees.
“I wish we could get more from the other companies for our families,” admitted Cheryl Claude, who worked for the retailer for 33 years.
“This is a start. We’re going to keep pushing.”
While KKR and Bain have contributed to the severance fund, the third firm that took part in the buyout, Vornado Realty Trust, has yet to contribute. Angelo Gordon & Co., Franklin Mutual Advisors, Highland Capital, and Oaktree Capital are all creditors who also have not contributed to the fund, and notably pushed for Toys R Us’ liquidation instead of reorganization. While these companies have not responded to requests for comments regarding the situation, New York hedge fund Solus Alternative Asset Management did have something to say.
“Given their responsibility for the Toys R Us liquidation after saddling the company with crushing debt, as well as their decision to terminate the original severance plan for employees, we applaud the private equity sponsors’ assistance to former workers,” the company said in a statement.
“Lenders are now focused on putting the brand to use in a way that would create jobs as well as exploring additional opportunities to support former employees.”
A new company called Geoffrey LLC, in honor of the Toys R Us’ giraffe mascot named Geoffrey, have attempted to put a halt to the plan that auctions off the company’s intellectual property, and instead is trying to revive the brand and start anew. Now, “Geoffrey’s Toy Box” will appear in about 600 Kroger stores in nearly 30 states this month.