This year will be the first Christmas season, for seventy years, without Toys “R” Us in the picture. Once the hedge funds who owned the company – KKK & Co., Bain Capital and Vornado Realty Trust – decided to shut its doors in March of this year, employees set to work to fight for severance payments – which the hedge fund companies were loathe to provide.
However, the sidelined employees persevered – traveling to Washington, DC to put forth their case to Congress; protesting in New York; and lobbying at annual meetings in front of investors. As a result of these efforts, nineteen members of Congress sent a letter to the firms, questioning their roles in the retailer’s troubles. As a consequence, in September of this year, the ex-Toys “R” Us employees and the firms involved in the demise of the company, agreed to the terms of a deal. Each of the hedge funds have pitched in $10 million to a severance fund and hired independent administrators to administer the fund’s disbursement. Eligibility and payment amounts will be based on several factors, including: that the ex-employee must have worked for Toys “R” Us for at least a year; that individual can’t have more than $110,000 or less than $5,000 in annual income; and must have met the termination and employment guidelines in the Toys “R” Us plan. The payment protocol is currently in draft form, with ex-employees allowed two weeks to comment. Giovanna De La Rosa of Chula Vista, CA, who worked for Toys “R” Us for 20 years talks about the victory, saying: “This is a historic moment for us. We were able to overcome the odds. But the work isn’t over – we’re going to continue to hold the creditors accountable for what they did.” I’d hope that that would include strengthening the size of the severance fund – $30 million is a very small amount, considering that the severance is to offset pensions/retirement funds that many employees would have been receiving. However, the story and its culmination, to date, makes everyone feel a little bit better about good guys winning out in the end.