Toys-R-Us Pays Severance
A bankruptcy judge approved a settlement to be paid to 33,000 former Toys R Us workers. The laid-off employees filed a class-action lawsuit against the company. Workers are receiving $2 million dollars. The law firm representing Toys R Us is getting $56 million. When a company files Chapter 11 bankruptcy protection, pensions and severance payments are considered unsecured debt. This means these debts are less likely to be paid in a bankruptcy, as they are low-priority debt.
33,000 Toys R Us workers awarded to split $2 million severance package
Although awarded $2 million dollars, each of the former Toys R Us workers will receive around $60. News reports indicate that some of the company’s previous employees who gave thirty years of service are disappointed and feel unappreciated and undervalued. Some of the workers are staying out of jobs in retail altogether, indicating other bankruptcies in the industry (Sears, Shopko, Kmart).
A judge in Virginia approved a settlement for laid-off employees.
The workers were told that they would receive severance pay as a part of a benefit package at the beginning of the bankruptcy. During legal proceedings, this was voided. In fact, workers who remained after the first 180 Toys R Us stores closed, were promised severance.
The law firm representing Toys R U will receive $56 million in legal fees, while workers get $2 million
Toys R Us staff who were laid off due to the company going bankrupt have been awarded $2 million by a judge after filing a lawsuit. The company promised, but then rescinded severance money to be paid to workers. The fact that the law firm is receiving a reported $56 million in fees and each worker will get $60, is discouraging for the former employees.