As playtime ends for Toys “R” Us, customers are being invited to attend the bankrupt company’s final sales and snap nostalgic selfies with a Geoffrey the Giraffe banner and the #alwaysatrukid hashtag. Former workers may find themselves using a different hashtag: #severancepay.
A group of workers wants proceeds from the liquidation — as well as the accumulated income that the chain’s private-equity owners have reaped over the years — to make a severance payment to those laid off.
A union petition calls for Bain Capital, KKR & Co. and Vornado Realty Trust to hand over to employees the $470 million that the firms had received in interest and fees from Toys “R” Us. The retailer’s 30,000 employees would get more than $15,000 each under that plan, which has 50,000 signatures.
The workers are also lobbying members of Congress to ask for a tax on private-equity and hedge-fund profits, and new regulation on leveraged buyouts and stock-buyback transactions.
Toys “R” Us is liquidating its U.S. business, a process that entails vacating hundreds of stores. Its bankruptcy filing last year came after spooked vendors and lenders decided an out-of-court reorganization wouldn’t work. The company had struggled for years under a load of about $5 billion of debt — the legacy of a leveraged private-equity buyout in 2005.
Toys “R” Us declined to comment. Representatives for Bain, KKR and Vornado did not immediately respond to requests for comment.
Representatives for the groups behind the actions say that their focus isn’t limited to Toys “R” Us — instead their critique is aimed broadly at the role private equity has come to occupy in retail.
“There are thousands and thousands of retail employees now working at companies owned by Wall Street and private equity firms, and this kind of financial instability in the sector makes it hard for workers to have sustainable careers,’’ said Carrie Gleason, a director at the Center for Popular Democracy, which is working on the campaign along with Organization United for Respect. “We’re organizing to ensure there’s some accountability for owners who aren’t necessarily running the businesses in good faith.’’