Skip to comments.Toys R Us workers say they deserve severance [tr]
Posted on 06/03/2018 5:07:49 AM PDT by C19fan
oys R Us isnt paying severance to its 30,000 workers who will lose their jobs as the retailer shuts down, even though it doled out millions in executive bonuses a week before it filed for bankruptcy. Now, some workers are calling on lawmakers to create new rules that would require bankrupt companies backed by private-equity firms to provide compensation to their workers.
(Excerpt) Read more at msn.com ...
Display of ignorance regarding how companies get funds to pay salaries.
If they did indeed pay millions in executive bonuses weeks before filing bankruptcy, those preferential payments will likely be clawed back by the trustee. But the money will go to creditors, not ex-employees.
It is possible that the bonus payments, right before and in knowledge of bankruptcy declaration, should be considered a fraudulent conveyance, and can be clawed back.
Who gets them is another story.
IIRC the normal order of payments priority, short-term creditors get paid first... that is, earned back wages, vendors. Then secured lenders. There won’t be anything left for the stockholders, or at most crumbs.
A severance is not an earned obligation—it’s a kind of employee bonus. It would come at the expense of the other creditors. I don’t think it should happen.
In any event, a few management bonuses spread out over thousands of workers wouldn’t amount to much. It’s the insult that’s got everyone up in arms.
Hourly wages and exec salaries and bonuses come from different sources?
I haven’t looked at the details, but, no matter how you slice it, this looks really scummy. But not surprising. I’ve seen similar things in my career.
Most employees of bankrupt companies are lucky to get their final paychecks, let alone severance.
Signs posted In window 35 to 50% off all inventory, go inside 5 to 10 percent, all baby items car seats carriages etc 10 percent above walmart and target, same with pier one exports
Stock holders get a small return on bad investments.
Former empoyees are entitled to nothing.
Yet the executives who bankrupted the company still get their bonuses.
This is how revolutions start.
How did the bonuses get paid?
Tha\t depends on whether or not they provided timely WARN act notice
There's a reason why this story is making national news. The company is headquartered in New Jersey, and several members of the state's Congressional delegation are making political hay out of it. The idea that these laid-off workers have anything to complain about is laughable when you have a national unemployment rate below 4% and employers are desperate to find good help. But this is New Jersey we're talking about ... and the state is a fiscal disaster that employers are fleeing in droves.
One of my young relatives has worked for them for a year.
I would agree if that would apply to management employees too. Unfortunately management employees will likely receive severance packages equating to salary continuation for a period of time........while the hourly receive nothing.
Can’t tell from the article, but the executive bonuses may be completion bonuses. An extra $20k or so if they stay with the company until it’s wound down. Keeps them from accepting new jobs before all the loose ends are tied up.
Management are likely stock holders
So in reality executives got 8 million worth of bonuses.
Bonuses equal out to about $240.00 per employee for a severance compensation. Bonuses are also taxed at the highest tax bracket, even for peons, so they wind up with about $150.00 bonus.
Cory Booker spends that much for his male hookers each night
Much adu about nothing...
Full time employees are entitled to state unemployment compensation. Part time employees may not be entitled to unemployment compensation, it depends on state law and/or hours worked per week.
Executive severance payments and termination bonuses may be based on an employment contract with the company. Sometimes executive contracts provide bonus payments for specific executives to work through the bankruptcy process in order to facilitate an orderly discontinuation of business. Having the CFO, and a few other key operating executives in place to the end may save the bondholders and creditors substantially more money than the continuation bonus payments.
Workers are under a collective bargaining agreement may also be entitled to company payments if provided for in the agreement. Workers employed “at will” are entitled to nothing other than wages for actual hours worked.
It is also possible the executive bonuses were earned in 2017 and paid in 2018 just before the bankruptcy filing. If so the payouts were not an executive “windfall”, they were payments of past compensation earned.
If the executive bonuses were extraordinary one time payments, authorized and paid knowing a bankruptcy filing was imminent, there will be litigation by the creditors and the payments will almost certainly be clawed back by the courts. The banks, the investment firms holding the bonds, and suppliers owed money for goods have teams of lawyers and accountants pouring over the books and assets. Improper payments to management will be an item they will explore and challenge in bankruptcy court.
CAPITALIST: - You’ve got some wealth. Now I want to figure out how I can earn some of my own.
SOCIALIST: You’ve got some wealth. Now I want to figure out how to make you give it to me.