Toys R Us sets up fund for employees
Some former workers will receive severance pay from $20 million pool
Private equity firms to pony up $20 million.
Some former Toys R Us employees will receive severance pay through a $20 million fund in the coming months.
KKR and Bain Capital, two of the three private equity firms that bought out Toys R Us in 2005, announced Tuesday they each will pledge $10 million to the TRU Financial Assistance Fund, which will distribute cash to former employees. The third owner of Toys R Us, Vornado Realty Trust, did not immediately respond to a request for comment about whether it plans to contribute to the trust.
“The confluence of the disruption in retail, the push by the company’s secured creditors to liquidate the company’s U.S. operations, and the fact that we have never experienced something like this in the history of either firm, led us to try and find a way to provide some financial relief for former employees,” KKR and Bain said in a joint statement.
Employees must have been working for Toys R Us for a minimum of one year on or after Sept. 18, 2017 – the day that the company filed for Chapter 11 bankruptcy protection – to be eligible for severance pay, according to the fund’s draft protocol.
Additionally, employees must have fallen into one of three categories: global resource center employees, stores and regional office employees and District Center Management and full-time hourly employees. Moreover, eligible employees can have neither an annual income of more than $110,000 nor an annual income of less than $5,000. Lastly, employees who received severance or termination pay are not eligible for payment.
The amounts individuals receive will vary, with $200 being the minimum. All of the contributions to the fund “will be paid directly” to eligible former employees, according to KKR’s and Bain’s joint statement.
To help distribute the funds, KKR and Bain hired Kenneth Feinberg and Camille Biros, who have led similar projects in the past – most notably, the September 11th Victim Compensation Fund.
“We have designed a transparent, straight forward and simple process that should provide some financial relief to eligible former employees,” Biros said in a statement.
For the next two weeks, former em- ployees can comment on the draft protocol, either through the fund’s website or through upcoming conference calls. The claims process will be launched Dec. 15, and eligible employees will be able to fill out forms to request pay until March 31, 2019.
The fund aims to complete the distribution process by April 30, 2019.