Two private equity owners of Toys “R” Us Inc have set up a US$20 million hardship fund for the thousands of former workers left jobless and without severance after the chain was liquidated in June.
KKR & Co and Bain Capital on Tuesday announced the creation of the fund aimed at helping the 30,000 workers affected by the store closures, a move that followed efforts by worker-backed organizations.
The fund was not legally required and the groups call it an “unprecedented” step toward helping families caught up in the store closures and bankruptcies that have roiled the fast-changing retail industry.
Workers are pushing to get an additional US$55 million they believe they are owed and are looking to other firms that had a stake in the toy chain and that they believed played a role in its demise.
“This is an amazing first step, but the goal is to keep the pressure on,” said Ann Marie Reinhart, 59, of Durham, North Carolina, who worked at Toys “R” Us for 29 years, most recently as a store supervisor.
She said she has not been able to find work that pays health insurance since she was laid off this summer.
While the iconic toy retailer was liquidating its hundreds of stores in June, workers were informed they would not get severance. They began protesting outside the New York offices of the retailer’s former owners KKR, Bain and Vornado Realty Trust, firms that loaded the company with debt, helping push it into bankruptcy in the fall of last year.
They then showed up at more than a dozen pension meetings around the country over the past few months, exerting pressure on them to push the equity owners they invest in to do right by workers and act more responsibly.
Since late summer, workers have been pressuring pension funds to in turn push a group of hedge firms that owned the retailer’s secured debt in a bid to get the remaining money they say is owed to them.
These so-called secured creditors, including Solus Alternative Asset Management and Angelo Gordon, were the ones that ultimately pushed for the liquidation as they looked to get returns for their investors.
The groups that organized the Toys “R” Us workers — Organization United for Respect, along with the Private Equity Stakeholder Project and the Center for Popular Democracy — say that the hardship fund is being structured to allow the other firms to contribute, paving the way for Solus, Vornado and others to contribute.
KKR and Bain said the fund was established in response to the “extraordinary set of circumstances” that led to the toy retailer being shuttered.
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