Should deep-pocketed investors and corporate executives profit as a company goes bankrupt? That's what workers laid off by Toys "R" Us are asking as theyearlier this year.
Toys "R" Us gave out millions in executive bonuses a week before filing bankruptcy, but isn't paying severance to the roughly 30,000 employers who are losing their jobs as the company shuts down.
In a campaign supported by the advocacy groups Center for Popular Democracy and the Organization United for Respect, dozens of Toys "R" Us workers on Monday took their demands for severance payments to the New York offices of the private-equity firms they claim are responsible for the chain's undoing.
Current and former Toys "R" Us employees are also readying a claim to file in bankruptcy court this week asking that they receive fair compensation, according to labor advocates in involved in the campaign.
A 2005 leveraged buyout of Toys "R" Us by Kohlberg Kravis Roberts, or KKR, Bain Capital and Vornado Realty Trust saddled the retailer with billions in debt and led to its unraveling, critics of the company claim. After declaring bankruptcy in September, the chain in March sought a bankruptcy court's approval to start closing its 735 U.S. stores.
"We're calling on Bain, KKR and Vornado to take the $470 million they received in interest and fees and pay out a $15,000 severance [payment] to the 30,000-plus Toy "R" Us workers who are losing our jobs," said an online petition with nearly 55,000 signatures delivered to KKR.
KKR declined comment, while the other two financial firms did not respond to requests for comment.
When the retailer eliminated positions in the past, severance was always paid, store manager Tracy Forbes told CBS MoneyWatch in May. Forbes, who started with the company in 1987, said she would continue to work until her store in Phoenix, Arizona, closes for good at the end of June. Workers have been told that "vacations that people worked for and earned would not be paid," she said.
"Because we were forced to liquidate the U.S. business, we were not able to follow the normal severance process," said a Toys "R" Us spokesperson. "In lieu of this payment we were able to provide a minimum of 60 days notice to help employees begin their transitions to new positions," said the spokesperson, who added that salary and benefits continued during that period.
Workers on Sunday staged a sit-in at the company's store in Union, New Jersey, and met with lawmakers in New Jersey, where Toys "R" Us is based and where more than 1,500 workers are being laid off.
On Friday, Sen. Cory Booker and other New Jersey lawmakers called on KKR, Bain Capital and Vornado in a letter to "do right by the company's workers."
The company is among multiple retailers backed by private equity to file forand Nine West among those to go bust after leveraged buyouts.