A settlement to 33,000 former Toys R Us employees was awarded by a bankruptcy judge. It has been a year since Toys R Us filed Chapter 11 bankruptcy protection. The former workers are receiving $2 million after a class-action lawsuit against the company was filed on their behalf.
Also getting paid is the law firm that is representing Toys R Us. The bankruptcy firm is getting $56 million in legal fees. When a company files Chapter 11 bankruptcy, severance payments and pensions are looked at as unsecured debt. Unsecured debts are typically less likely to be paid and are considered low-priority debt.
When the 33,000 Toys R Us former workers split the $2 million severance package, they will each get $60. Reports indicate that previous employees are disappointed with the amount of severance awarded to them. As part of a benefit package at the beginning of the bankruptcy, the workers were told that they would receive severance pay. During the legal process, however, the severance package was voided. Workers who were promised the money remained even after the first 180 stores closed.
The laid-off workers feel unappreciated and undervalued. Some of the workers gave 30 years of service to the company. Those who were burned by Toys R Us are staying out of jobs in retail stores altogether, knowing about other bankruptcies in the industry (Kmart, Sears, Shopko, and more).
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 The company promised , but then rescinded severance money to be paid to workers.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.