KKR and Bain Capital, which are the private equity firms that owned Toys R Us before the company declared bankruptcy earlier this year, said that they have each pledged $10 million to create the TRU Financial Assistance Fund, which aims to distribute severance funds to former employees.
The move is not so common among firms since such are the not required under bankruptcy law to do such feat.
In a joint statement, KKR and Bain said that the fund is being established in response to “an extraordinary set of circumstances” for both the companies.
“The confluence of the disruption in retail, the push by the company’s secured creditors to liquidate the company’s US operations, and the fact that we have never experienced something like this in the history of either firm led us to try and find a way to provide some financial relief for former employees,” said the firms in a statement.
In order to be eligible for the payments, those that have become jobless after the company’s liquidation will have to meet some standards.
The former employees will have to have worked for Toys R Us for at least a year, they can’t have more than $110,000 or less than $5,000 in annual income, and they must have met the termination and employment guidelines in the Toys R Us plan.
New Jersey Democratic US Senators Cory Booker and Bob Menendez, as well as US Representative Bill Pascrell JR, New Jersey, whose district one included the company’s headquarters, issued a joint statement regarding the announcement by the firms for the creation of the fund.
“Fundamental to our values as Americans is the ideal that if you work hard and play by the rules, you should be able to get ahead,” the statement said. “For months, we have been raising concerns around the lack of support for impacted Toys R Us employees and their families in an effort to provide some measure of fairness to the workers who built a great New Jersey company. Today marks a positive step toward fulfilling a moral obligation to thousands of former Toys R Us workers.”
The two senators and congressman stood with Toys R Us workers in June outside the New Jersey-based retailers’ former headquarters in Wayne demanding fairness for workers and their families affectd by company’s bankruptcy.
US Senator Bernie Sanders, who is a former presidential candidate, tweeted about the establishment of the severance fund, saying that , “We will continue to fight the greed of Wall Street and private equity, and to expand the collective bargaining rights of all Americans.”
Shortly after Toys R Us announced that it was going out of business, employees across the country banded together to protest for severance payments in Washington, DC, and New York, and even lobbied in front of Congress and the firms’ investors. In September, the firms and the ex-employees agreed to the deal.
At present, the former employees are focusing their attention on hedge funds Solus Alternative Asset Management and Angelo Gordon & Co that were behind the decision to liquidate the company.
Kenneth Feinberg and Camille Biros have been appointed by Bain and KKR to be the independent administrators of the fund, according to a joint release from the firm.
In the past, the two have also assisted in distributing funds to different groups, including compensation for the victims of the 9/11 attacks.
“We have designed a transparent, straight-forward, and simple process that should provide some financial relief to eligible former employees,” said Biros in a statement. “Next, we want to hear from those former employees affected by the unexpected liquidation.”