Federal Reps Demand Severance Pay For 33,000 Toys R Us Workers

WAYNE, NJ — Toys R Us workers joined with federal representatives Friday to demand fair severance pay after they lose their jobs as part of the company closing its stores.

Rep. Bill Pascrell (NJ-09) and New Jersey Sens. Cory Booker and Bob Menendez stood outside the Toys R Us Totowa store on Route 46 Friday.

The 33,000 Toys R Us employees, some of whom have been with the company for decades, will not get severance pay as a result of Toys R Us declaring bankruptcy in September and announcing in March it would close down its 735 U.S. stores. More than 1,100 lost their jobs at the company's Wayne headquarters May 14.

"I'm not sure what I'm going to do without my job once I'm done," said Cheryl Claude, an assistant manager at a Toys R Us in Woodbridge, who has worked at the store for more than three decades. "My husband works at BJ Wholesale — to add me to his health insurance is going to be half his paycheck. I feel I have done so much and to get nothing after 33 years is just wrong."

Toys R Us had more than $5 billion in debt and was forced into bankruptcy following a leveraged buyout. Private investment firms acquired the company.

"America should work for people who work hard and play by the rules, but that bargain was broken for thousands of Toys R Us workers whose company was saddled with so much debt and fees from financial firms looking to pad profits that the company simply couldn’t succeed,” Booker said. "Now, workers are being left with nothing while these same firms are in line to recover millions from Toys R Us’ liquidation."

Nearly 10,500 people have signed a petition stating that the company's 33,000 employees deserve severance pay.

While those employees will not get anything, CEO David Brandon and four other executives shared $8.7 million in retention bonuses.

A federal bankruptcy judge ruled late last year that Toys R Us may pay 17 executives about $14 million in incentive bonuses if it hits a certain earnings amount. Attorneys representing the company argued that the bonuses would help executives focus on increasing sales during the past holiday season.

Some Babies R Us stores have already closed while discounts of up to 50 percent off are being offered at Toys R Us stores. The stores will close on a rolling basis.

The bankruptcy filing came amid slumping sales and mounting debt, which grew to about $5 billion, although Toys R Us announced at the time that the "vast majority" of its 1,600 worldwide locations were profitable.

The once-dominant retailer struggled to compete with online retail giant Amazon and stores like Walmart, The New York Times reported, and amassed $5 billion in debt.

Toys R Us had a $400 million debt payment due this year and was "burning through cash," the Times reported, and hired law firm Kirkland & Ellis to devise a strategy moving forward.

Isaac Larian, the billionaire CEO of MGA Entertainment, tried to save the once-dominant retailer, but said recently that he was unable to reach an agreement with Toys R Us' lenders, CNNMoney reported.

Pascrell wrote in a recent op-ed piece in USA Today that private equity firms destroyed Toys R Us, and warned that without proper reforms, more retailers would be driven under by unregulated private equity practices.

"Private equity has been able to obscure its role in the ruin of retail by hiding behind e-commerce," Pascrell said in the opinion piece. "It is important that sunlight be shone onto their practices, or there will be many more American-made businesses that suffer the same fate as Toys R Us."

Related:

• Toymakers Launch Last-Ditch Effort To Save Toys R Us
• Toys R US CEO Pocketed $2.8M Bonus
• Toys R Us Files Chapter 11 Bankruptcy, Outlines Strategy
• Toys R Us Closing Is The End Of An Era
• Toys R Us Files Chapter 11 Bankruptcy, Outlines Strategy
• Charles Lazarus, Toys R Us Founder, Dies At 94
• Toys R Us Workers Start Severance Pay Petition

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Photo: Rep. Bill Pascrell (NJ-09), Sens. Cory Booker and Bob Menendez, and Toys R Us workers stand outside of the business' Totowa store on Route 46 demanding severance pay for 33,000 employees. (Courtesy of Rep. Bill Pascrell)