$20M set aside for Toys R Us ex-workers
Thousands of former Toys R Us workers will receive severance payments from a new $20 million fund.
The move is considered rare among privateequity-backed companies that file for bankruptcy. Even so, the amount pledged is well below the $75 million a workers rights group says those who lost their jobs are owed.
Bain Capital and Kohlberg Kravis Roberts announced Tuesday that each had committed $10 million to a fund for former Toys R Us workers. Bain and KKR are two of the three firms that bought Toys R Us in a 2005 leveraged buyout and loaded it up with billions of dollars in debt before liquidating the chain in June. One hundred percent of contributions to the fund will be paid directly to eligible employees. The fund is structured so that other "interested parties" can contribute. A third Toys R Us owner, Vornado Realty Trust, did not immediately respond to a request for comment on whether it would give to the fund.
"This is a valuable and important step designed to provide a degree of financial relief to eligible former employees of Toys R Us," said Kenneth Feinberg, an expert on designing compensation funds and one of the fund's independent administrators.
Exactly how the funds are distributed will be framed around company data including earnings and the number of hours worked, as well as input from former Toys R Us employees. A draft of the proposal suggests eligible employees must have worked for Toys R Us for at least one year, have made no more than $110,000 in annual income and have made no less than $5,000 in annual income.