Toys "R" Us employees seek severance from private equity

[turbinetree]

Source: Axios

Should the former private equity owners of Toys "R" Us pay around $70 million in severance to the company's 33,000 laid-off employees?

Why it matters: This is not an academic question. It's been debated by big public pension funds that invest in private equity, prompted by a lobbying campaign by left-leaning nonprofit advocacy groups.

The basic argument: Bain Capital, KKR and Vornado killed Toys "R" Us by saddling it with too much debt, while taking out fees along the way. It's only fair that they help folks who are without work because of private equity's mismanagement, particularly when PE firms are so rich and many of the employees were living paycheck-to-paycheck.

The legal argument: There is none. The private equity firms no longer own Toys "R" Us, and a bankruptcy court judge threw out the severance package because employees weren't high enough in the creditor stack.

Read more: https://www.axios.com/toys-r-us-private-equity-severance-c99eb63c-c465-4d57-a511-ff74f9bc61fb.html

---

And just guess whose hedge fund is in the mix Bain Capital................Mitt Romney running for the Utah Senate

And the really insulting aspect of this, is this.............


The legal argument: There is none. The private equity firms no longer own Toys "R" Us, and a bankruptcy court judge threw out the severance package because employees weren't high enough in the creditor stack.


You can work through a bankruptcy..................and the court sides with the creditors that your work is free, and do not deserve a pay check and your not high on the creditors stack because ....................

[Wellstone ruled]

1. Sad to say,these hard working folks

will not see a dime. And they will have to wait ten years for this to clear.

[turbinetree]

2. Yepper, spot on

And to add further insult they were not deemed worthy...............because the hedge fund was using the employees own money to buy the company..................simple amazing...............

[Wellstone ruled]

3. I am speaking from experience.

I and my Boss had several Thousands in payroll and Comp time coming the day of the Company Bankruptcy. What most likely will happen is this,the Bankruptcy Judge will move the start date of the Bankruptcy back ninety days to recapture all Accounts Payable or Receivables that were still in the accounting system. It is called sweeping accounts in order to pay for the Attorneys.

At the end of the day,if you do not file a Mechanics Lien in lieu of pay,your case will be heard,you might get 10% depending on your tail wind. And that will happen ten years down the road.

[turbinetree]

4. When I was with United we were employee owned

and when 9/11 happened, prior to that, we gave the company money to buy the corporation with a pay cut and by giving up a break time Mechanics and the pilots (froze there pay) ................so when 9/11 happened we went to wall street to keep us afloat, by giving assets to cover the costs until we could recover................they said no, the company then went into lay off mode to save cash, and everyone after 1989 were not protected.................so in the end for United to get out of debt from the attack and to get money wall street said to file for bankruptcy before they would give any money and change the board because they didn't want mechanics or pilots at the table, they do not in large like when employees own companies especially airlines ..............make a long story short, since we had stock....................some of us only got 2.00 per share, for a maximum of $5,000 for some of the people that had been there longer, I know a couple of men that lost around $250,000 to 650,00 in retirement ...................I hate hedge funds..................and how bankruptcy laws can really screw employee.

I wish I had filed a lien ..........................

I hope everything is well....................I and so many others are still bitter, its not so much about the money part its about the dignity, that each employee has for the company, and just asking to be respected....................

[Wellstone ruled]

5. Oh how I understand.

Our BK hit one week before Xmas in 1984. And during a Union Board Meeting of the Health and Welfare unit,which I was a member at the time,I suggested a Mechanics Lien on Inventory,Buildings,and Transportation Equipment as well as all Computers and Data storage equipment. Got the Idea from a Shister Account whom I new. We had some 400 people to protect from total wipe out.

Under Reagan,they changed the BK rules in total favor of the First Secured Creditors and there was explicit Language baring payment of Wages or other Benefits to any and all effected parties. In fact,what our Attorney discovered was what is called a Recapture Provision in which the Bankruptcy Court could demand all wages and Salaries paid after the Adjusted BK in effect date to be repaid to the Courts. Thankfully we were a operation within the confines of Minnesota.

My boss lost a ton,he called me the day the Certified Checks arrived. Think mine was fourteen dollars after with holding. Had some where close to 14k hanging in the courts. The Boss got four thousand out of his claim. Still remember him working to wind down the operation only to get screwed once again.

Bottom line,we were only able to Salvage roughly twenty Pensions out of some 400. It took the most part of two years to find employment for all those effected. Lot's of passing the Hat at monthly Union Meetings .

[SWBTATTReg]

7. Wow...my heart is breaking hearing your stories (United, Wellstone...

and only 20 pensions out of 400 saved. I think God has someplace in mind for this kind of legal trickery.

Thief by legal means, when salaries and pensions should get top billing first before creditors, etc. After all, aren't employees technically creditors of the firm (owed money by company)...there probably is a technical cutoff here, in that if you were an employee you were out of luck. If you are an contractor instead of an employee doing the exact same thing, same pay, then you might be in luck.

I'm guessing here, but my overall feeling is WOW. Just WOW.

[Wellstone ruled]

9. That piority rule changed in the early nineties.

Tons of Teamster Shops were being BKed and the Feds who had us under Court Ordered protections from the Mob,realized they messed up and had some of Priority items removed or modified.

The Fellow who ran the Hedge Fund who did our last LBO ended up in Club Fed for Fraud and Tax evasion as we as his Spouse. It took fourteen years to catch these Guy's who were living it up in the Bahamas. Sucker the Bastard in coming to Miami . Ooops,

Just checked my notes,thirteen members in Distribution and seven Delivery Drivers. Most of the Drivers were covered under Seniority Rules. My notes show twenty one Guy's got screwed totally as well as almost a Hundred Eighty plus Distribution People. None of the hundred eighty plus did not have the required vested time for any Pension Bennies. We had just complete a Major Expansion and Hiring Drive about three years before this all went down.

Again our Bargaining Unit fell for that so called Reaganomics,and they got their collective asses handed to them as a result.

[SWBTATTReg]

12. Wow, thanks for the heads up. This raises a red flag for other shops out there ...

as well as bargaining issues to hammer companies on. I guess all of us all now need to be experts in payroll law, bankruptcy law, and everything else.

Another means to legally cheat people out of benefits. Intent on pension laws was to protect people, and then fail so miserably. Another instance of where the laws are so favorable to companies who use the bankruptcy law to benefit a few folks while screwing others out of their hard earned benefits.

Also points out to the power of bankruptcy courts to override any provisions of labor agreements and the like, to satisfy creditors, regardless of the negative impacts to former workers.

[Wellstone ruled]

13. It is all about the Contract Language or lack there of.

We had a Successor Clause in our contract explaining just how worse case scenario built into it with regards to lost wages and benefits. At the time,Reagan's BK rule over road that language. So we were crap out of luck.

Every shop stew or Rep needs to make darn sure just how protected he or she is. Please,do not rely on some shop floor interpretation of your Contracts. CYA !!

[turbinetree]

14. Its how the wall street mentality works .........................everyone should go back

and look at what happened at Eastern Airlines, and TWA, Braniff for starters.

Bankruptcy of a company puts the entire operation into receivership, the court then decides the winners and loser and they look at assets, and the collateral of the assets (United we owned a lot of the airplanes and equipment----------it was profit of having them paid off for our pensions).............but the first winners in the bread line are always wall street, because they can go in the court and say...............that was our money in the first place, the employees were working under "our" dime, penny, dollar and without "us" they would not be "them".

Contractors fall below the food chain, near the bottom, above the employee

Even when we took over to get rid of Wolf the former CEO of Tiger (which then became FEDEX) and then he came over to United, when we popped the buyout and takeover of United we had to go to wall street, and not some credit union, or state bank, the regulators in the fed side basically demanded this ....................but they (wall street) wanted the blood money (the pay cut and the fifteen minute) I call it from the sweat of the worker

[MichMan]

11. If you were employee owned why couldn't everyone get what was owed to them?

[turbinetree]

15. Bankruptcy filing, we were given stock for our cuts

and when 9/11 occurred the stock went down.......... a lot.
If we had been private instead of publicly traded...............when you are on the public market you are accountable to the bond market and the people that buy your stock, your price determines what you can borrow, that stock is also used as collateral, for fuel, gates, etc....and going to war

[harun]

6. Good luck with that. Life in the land of 1%'rs.

[dembotoz]

8. yep seen it too many times

[sandensea]

10. The vulture culture

Any legitimate claims are to be placed at the bottom of the creditors stack; and any money laundry's, at the top - especially if said laundry is owned by a top GOP bundler.