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Over the past few weeks, Toys R Us has been holding mega-discount sales on all its merchandise. The troubled toy company is liquidating its assets after a September bankruptcy that followed with a failure to find a buyer or lender for a debt restructuring deal.
Those who won’t take home any of the money made from these going-out-of-business sales are the very people running it: More than 30,000 Toys R Us workers are helping the brand through its liquidation process, and on top of not having a job once Toys R Us shutters for good, they also won’t receive any severance. These workers are now rallying for the failed toy company to pay them severance in a petition that already has more than 50,000 signatures.
“In the next few weeks, over 30,000 Toys R Us workers will be out of a job with no severance,” Colleen Kleven, a Toys R Us worker who created the petition writes. “Private equity funds and corporate executives shouldn’t profit by bankrupting a company and throwing people out of work. There are more than 1 million retail workers at private equity-owned retailers in the United States. This corporate greed is hurting me and my family — and it’s unacceptable.”
Kleven is referring to the 2005 acquisition of Toys R Us by Bain Capital, KKR, and Vornado, a deal described as “vulture capitalists ate Toys R Us,” in which, under new ownership, the toy company became saddled with $5 billion worth of debt while its new buyers mismanaged things and failed to reinvigorate the business — a deliberate profit strategy straight off of Wall Street.
“I love my job so much, and it hurts that these private equity companies don’t care about running a toy business — they just want the profit, no matter the cost,” Kleven writes.
Companies go out of business all the time, especially today. What makes the story behind Toys R Us so bewildering, especially to workers like Kleven, is that the companies that bought Toys R Us were able to nab huge profits even as the company went up in flames. Bain Capital, KKR, and Vornado have reportedly scored $470 million off Toys R Us.
On top of that, five executives were allowed to split an $8.2 million bonus, and Toys R Us CEO David Brandon got a $2.8 million bonus. These payouts are cemented into executive contract from the get-go. But according to the New York Post, Brandon and his fellow Toys R Us executives get to leave the sinking ship early next week with their giant wads of cash while retail employees like Kleven will continue to see out the gloomy end of Toys R Us.
Even if the three private equity groups don’t offer any severance, Toys R Us workers are now working to make sure this situation can’t be repeated. A few longtime workers are currently lobbying Congress to better regulate private equity firms swooping into like retail looking to make money.
“We’re here to speak to Congress to act on these laws, to make it impossible to do this to other retail workers,” Tracy Forbes, a Toys R Us employee of three decades, told CBS. “As a manager, I’m trying to make sure my team members are taken care of.”