Senator Elizabeth Warren is urging the companies responsible for the demise of Toys “R” Us to take care of its former employees.
Warren, who has said she’s considering a run for president in 2020, wrote to five investment firms that had advocated for a liquidation of Toys “R” Us assets and asked them to consider supporting a severance fund.
Two of the company’s owners, Bain Capital and KKR, have discussed setting up such a fund, according to sources familiar with the discussions. The company’s third owner, Vornado Reality Trust, also received a letter from Warren about the issue.
“Your companies had a financial stake in Toys “R” Us and played a role in its liquidation and closure,” she wrote to Vornado, Solus Asset Management, Highland Capital Management, Angelo Gordon & Co., Oaktree Capital and Franklin Mutal Advisors, a unit of Franklin Templeton Investments. “More than 30,000 Americans lost their jobs because of your decisions, and your contributions to a hardship fund are vital to begin to make them whole.”
About 31,000 employees lost their jobs when Toys “R” Us closed this year. None were paid severance. Creditors were paid first and no money was allocated after the bankruptcy to pay the employees severance.
According to the sources, Bain Capital and KKR have discussed kicking in $10 million a piece to help laid-off workers,
The $20 million would pay an average of about $650 per employee, below what they would have been entitled to under the company’s severance program prior to bankruptcy.
Warren estimated that it would take $75 million to pay the accurate severance.
In her letter, the senator also asked the companies to explain their thought process behind pressing for liquidation instead of reorganizing Toys “R” Us. The investment firms reportedly believed the would “see a better return if the company were liquidated and its assets sold off,” her letter said.
When reached for comment spokespeople for Angelo Gordon and Oaktree declined. None of the other four companies responded to requests.
Warren’s actions were praised by public interest groups which have been leading the fight for severance for the Toys “R” Us workers.
Several of the groups held protests outside of Toys “R” Us stores earlier this year before they closed. Protesters rallied last week at the New York offices of Solus and Angelo Gordon as well.