'How can they walk away with millions and leave workers with zero?': Toys R Us workers say they dese

[Eugene]

Source: Washington Post

‘How can they walk away with millions and leave workers with zero?’: Toys R Us workers say they deserve severance

By Abha Bhattarai
June 1 at 4:07 PM

Toys R Us isn’t paying severance to its 30,000 workers who will lose their jobs as the retailer shuts down, even though it doled out millions in executive bonuses a week before it filed for bankruptcy. Now, some workers are calling on lawmakers to create new rules that would require bankrupt companies backed by private-equity firms to provide compensation to their workers.

On Friday, more than a dozen workers met with lawmakers in New Jersey, where Toys R Us is based, to push for severance pay. Workers also called for new regulations on leveraged buyouts, as well as windfall taxes that would prevent private-equity firms from running a business into the ground and then walking away with huge sums of money.

In addition to meeting with lawmakers, employees are preparing to file a claim in bankruptcy court next week asking that they be fairly compensated, according to workers’ advocates at the Center for Popular Democracy.

“This is the story of a company — one of the most iconic in America — that was saddled with so much debt that it could not succeed,” Sen. Cory Booker (D-N.J.) said at a Friday event in the parking lot of a Toys R Us in Totowa, N.J. “And now the big guys are walking away and the workers are left with nothing.”

-snip-

Read more: https://www.washingtonpost.com/news/business/wp/2018/06/01/how-can-they-walk-away-with-millions-and-leave-workers-with-zero-toys-r-us-workers-say-they-deserve-severance/

[Anon-C]

1. The animal spirits are loose in the economy...

...dontchaknow!

Look for this story to be covered on Marketplace...not.

[SWBTATTReg]

2. Another example of loading up a company's balance sheet w/ ill conceived debt and ...

obligations and then turning around, and going bankrupt to cash in on the assets of said company. In the meantime, these poor workers get nothing.

Wrong, absolutely wrong. It's time that the markets start awarding the owners of capital and equity far less and workers far more. Before awarding the so called top 1% of management of companies going out of business, workers at risk should receive a standard (based on years of service, starting w/ a minimum of two weeks severance pay) two weeks severance pay, COBRA to keep their health insurance until they can replace, and a 100% vestment of workers pensions already earned.

This should be part of the process that a company undergoing bankruptcy proceedings (or thinking about) should already be considering. If the company claims that they simply don't have the money, then authorities should step in, seize the company, and claw back management awards, in order to guarantee worker benefits already promised.

[Maraya1969]

5. It was illegal to plan a bankruptcy. Why are these people getting away with it????

[pangaia]

8. Why? Surely you jest...

[Sophia4]

15. Yes.

[tblue37]

3. The Mitt Romney business model. nt

[OregonBlue]

4. That was my very first thought too. And it seems to be the one Trump has chosen for the USA.

[packman]

6. Yep, take over a company and pay out huge salaries/bonus'

until it's bankrupt then sell off the bones. Vulture capitalism at it's finest.

[Marcuse]

14. Corporations Are People, My Friend!

“But Governor, you’ve made a great living buying, dismembering and selling corporations. It’s been illegal to do that to people for a hundred and fifty years!”

[Sophia4]

16. Great post. Thanks.

[Grins]

20. Business model? HELL!

Who were the private equity firms behind "Toys R Us"?

KKR & Co., Bain Capital, and Vornado Realty Trust.

They are still destroying America.

Think those companies got a piece of those "executive bonuses'"? You know, for their "business expertise..."?

This is exactly what corporate rapists like Bain Capital and Cerberus Capital Management do every day to hundreds of companies with hundreds of thousands of employees. And we point at China and Mexico for taking jobs?

So how much debt are we talking about here? "Toys R Us had been drowning in $5 Billion of debt". Not millions or even tens of millions, or a couple hundred million. Billions. Five of them.

The company's payments to cover the debt saddled on them by those private equity firms took the cash they needed to "invest in its worn-out suburban stores or outdated website", so sales plummeted. And now that has caught up with them. And us.

[3catwoman3]

22. It should be spelled...

...BANE Capital, as in wolfsbane, henbane, or bane of existence.

Bane - a person or thing thatruins or spoils/ a deadly poison/ death; destructin; ruin

I wonder if the choice of the company name was some sort of sick joke.

[ck4829]

25. Indeed

[dlk]

7. Welcome to Vulture Capitalism

[Turbineguy]

9. Mitt Romney called it

"harvesting profits".

Kite it, bleed it, puff it, sell it.

[Maggiemayhem]

10. What they did at American Apparel

Helped with debt and then forced owner out. Gave themselves 6 and 7 figures, ran the business into ground by firing key employees.Fired the LA garment workers that had the best salary and benefit in the industry and then took the money and ran. Made in the USA sweatshop free.

[3catwoman3]

11. SOP, it seems. Much the same thing happened...

...when United declared bankruptcy. My husband flew for United for 15 years after 20 years in the Air Force. The pilots got royally screwed. Some of their compensation had been in stock, which sold for about 10 cents on the dollar, which the company kindly sold for the pilots, deducting a processing fee, of course, which made it worth even less.

Those, like my husband, who reached the mandatory retirement age of 60 during the bankruptcy got screwed a second time by the PBGC - Pension Benefits Guarantee Corporation. Altho mandatory on the part of the airlines, retirement at 60 is considered "early" by the PBGC because it is not 62, therefore the pension is reduced. Top that off with the fact that the initial determination by the PBGC is what the pension will be forever - never ever a COLA adjustment. PBGC pension = about 1/3 of what the full UAL pension would have been. A major hit.

The UAL executives got bonuses for "seeing the company through tough times." The bonuses were approximately equal to the money taken away from the pilots.

A pox on greedy upper management.

(and, I know, I know, everybody hates UAL. My husband worked damn hard while he was there.)

[kimbutgar]

17. My hubby is still an employee and I don't know if the pbgc pension will be there when he retires

He got screwed over in the first bankruptcy also. Twitler just put some hedge fund toady guy in to run the PBGC recently.

https://burypensions.wordpress.com/2018/05/15/breaking-news-new-pbgc-director/

A rethug tool.

Ps searching for this article I found one from heritage foundation. Their goal is to destroy pensions and rob the pbgc money. It was a sickening article.

[appalachiablue]

23. That's a real serious group alright; hope things turn out ok.

[Dopers_Greed]

12. Trumps "roaring" economy

[Ilsa]

13. These are schemes as bad as pyramids.

They should be made illegal. I don't know how, perhaps through the bankruptcy code and how assets are marshalled.

[spike91nz]

18. Romney

Bain Capital strikes again. Romney business is capitalizing on well-earned brand value and then destroying the company leaving it in tatters and in debt. A vulture capitalist of the first order. Every thing he touches seems to fall into disaster.

[heaven05]

19. shameless greed

predatory capitalism, executive prerogative on profit gained by employee work/service. The worker? Disposable and expendable. Hope the workers get something for their service and loyalty to a name brand store.

Share the goddam profit. What's so difficult about that? Back to the survival of those with the most days, everyone else, fight for it. New Gilded age beginning? Racial, cultural resegregation? 'Homelands' ameriKKKan urban style/ for some. Right? Especially if dipshit called potus gets out of this russian shit and 'wins' again, with some nefarious activity in voting procedures and denying the right on spurious grounds.

We the People don't mean a thing to these sociopathic narcissists with money and perceived power over others. Crazy times and those 30-thousand workers denied, represent a larger number affected if we parse in the family. Insurance, profit sharing? I did not know. Put the real numbers up, I bet you and I would be astounded. It's sooooo wrong.

[Yo_Mama_Been_Loggin]

21. Kick

[ck4829]

24. Late capitalism sure does suck

[elias7]

26. Without corporate regulations and unions,

the American worker has no chance... Vote Trump!

[Hoyt]

27. ToysRUs was in trouble before 2005, probably would have gone under much earlier without selling out

then. Toys plight was so bad before 2005 that its debt was down graded to junk status a year before the leveraged buyout. They were already dead in the water, and the buyout probably extended their life.

Severance pay seems humane. It does appear employees were given 2 months notice and most would be paid even if they didn't finish working out that period.

A severance pay law sounds good, assuming a company doesn't wait too long to pull the plug. What would be even better would be a federal unemployment benefit that is much more robust than what we have now. This stuff is going to keep happening and sooner or later we are going to have to come up with a way to handle extreme unemployment. I guess that is kind of tough to address when we have exceptionally low unemployment at the moment.