CNN Business reports indicate that former Toys R Us (TRU) workers in the United States are set to receive some form of severance, after Bain Capital and KKR – two of three former-owners of the retailer – set up a US$20 million fund to pay employees.
The fund came about after negotiations between advocacy groups Organisation United for Respect, Private Equity Stakeholder Project and the Centre for Popular Democracy and the private equity owners reached an agreement.
US bankruptcy laws prioritise paying creditors before paying redundant employees so had the employees been let go before the bankruptcy announcement, they would've been entitled to severance pay of one week of pay for every year of employment.
Lawyer Kenneth Feinberg has come on to help distribute the funds and has proposed that the funds should go to those who had worked at the retailer for at least a year and who earned between US$5000 to US$110,000 per year.
The advocacy groups are seeking additional contributions to the fund, from third former-owner Vornado and TRU lenders Solus and Angelo Gordon.
According to the groups, US$20 million will not cover an entire severance plan for the employees, so they're aiming to get US$75 million into the fund.
The payments are expected to begin after the 15 December and will be complete by April 2019.