KKR and Bain Capital are creating a severance fund for workers left jobless after the bankruptcy of Toys ‘R’ Us, which the fund companies, along with Vornado Realty Trust, acquired in 2005 for $6.6 billion
KKR and Bain said they would contribute $10 million each to the TRU Financial Assistance Fund. They named Kenneth Feinberg and Camille Biros as independent administrators.
Toys ‘R’ Us filed for bankruptcy protection more than a year ago. In March, the company announced it was closing its U.S. business, including 800 stores and 31,000 employees.
Workers were initially seeking $75 million, which they said they were promised, and they traveled to Washington, D.C., to press lawmakers and lobby investors. Last month they protested hedge funds Solus Alternative Asset Management and Angelo Gordon & Co., who workers said were behind the decision to close the business.
Originally, some of the controlling hedge funds had decided to turn down an auction of Toys ‘R’ Us assets in favor of a reorganization. Solus and Angelo Gordon have denied a role in the liquidation and said they would not contribute to the severance fund.
“This is a historic moment for us; we were able to overcome the odds,” Giovanna De La Rosa of Chula Vista, Calif., who worked for Toys “R” Us for 20 years, told The Wall Street Journal. “But the work isn’t over. We’re going to continue to hold the creditors accountable for what they did.”
Feinberg and Biros have previously overseen the 9/11 Fund, the Deepwater Horizon fund, and the GM ignition switch compensation fund, as well as the fund for victims of the Pulse nightclub shooting.
The claims process is expected to begin on December 15, with a goal of completing the payouts by April 30, 2019.
Payouts will be determined by historic earnings, hours worked, tenure, input from former employees, and other factors.
Toys ‘R’ Us cited $7.9 billion in debt against $6.6 billion in assets when it filed for bankruptcy in 2017.