Toys R Us workers say they deserve severance [tr]

Washington Post ^ | June 2, 2018 | Abha Bhattarai

[C19fan]

oys R Us isn’t 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.

[Teacher317]

But this is New Jersey we're talking about ... and the state is a fiscal disaster that employers are fleeing in droves.

And NJ just passed a law to bring back their own version of the recently-eliminated "Individual Mandate" and push it onto NJ victims... up to $2000 in tax penalties for daring to reject the glories of ObamaCare. Why would anyone keep voting for this?

[yoe]

When did employers become keepers of entitlements?

[Alberta's Child]

Anywhere. Get another job in New Jersey, or move somewhere else.

My own company was acquired a few years ago. As soon as the transition was made I began making plans for a career change. I did this even though I saw no evidence that the new situation would be a disaster.

[Alberta's Child]

These politicians gave a press conference the other day where they laid out all the problems Toys R Us was facing after their leveraged buyout.

They are full of sh!t because these problems weren't a big secret in business circles -- but none of these dopes said a damn thing about it until after the company shut down.

[lastchance]

You do know that not everyone can just pick up and move, don’t you? You do know that for certain people the job market is very, very tight and not getting better, right? So to just flippantly tell people go somewhere else is rather myopic. It is not as if they don’t know their options or the time it may take to get there. It’s just that for many the practical steps of doing so are not going to happen overnight.

[Soul of the South]

“On the other hand, if someone was willing to fight, there must be something there worth fighting over.”

Lots of money in big chain retail bankruptcies. Even after inventory markdowns a well run clearance process for a big chain will return hundreds of millions in cash. Lease termination negotiations with landlords are also worth millions with respect to how much other creditors are paid. During a similar big discount store chain bankruptcy in the 1990’s the CFO’s of the big suppliers pooled resources with the banks to hire heavy hitter bankruptcy attorneys to scrutinize every detail. The company I was with recovered $46 million of the $50 million in accounts receivable. Going into the process we expected to recover 25 cents on the dollar. As for those who didn’t join the effort, ten cents on the dollar.

Many of these big bankruptcies involve negotiations with the federal government about the disposition of millions of dollars of pension money. Here again, the tough and determined negotiators for creditors can often prevail. Taxpayers would be shocked at how many time the federal government weakly assumes responsibility for pension obligations while the creditors sweep up the cash. When millions of dollars are at stake, those who fight most aggressively typically get the largest shares of the pie.

[Alberta's Child]

I understand that. My point is that this didn't happen overnight. It actually took years -- maybe even more than a decade -- to unfold.

I have friends who were laid off from Toys R Us as "cost-cutting measures" YEARS AGO after the leveraged buyout. The departure of that institutional knowledge was a big reason why the company fell apart.

[Alberta's Child]

Toys R Us was unusual in that they owned their major distribution center rather than leasing it. So there is a 1M+ square foot building in northern New Jersey that may end up being the company’s biggest asset as it is dissolved.

[Soul of the South]

“They are full of sh!t because these problems weren’t a big secret in business circles — but none of these dopes said a damn thing about it until after the company shut down.”

Any time a public company is purchased by private equity firm(s) the first thing that happens is the assets are stripped and the company is loaded with debt. The owned real estate assets are spun off into a separate company that then charges the leveraged company high rents. The acquired company is also charged high management and consulting fees by the private equity owner. Almost all of the big retail private equity deals over the past 25 years have ended up in bankruptcy and liquidation. Major creditors and insiders know months before filing the company is approaching insolvency and about to go down. In fact suppliers often tilt the scales and force the bankruptcy filing when they reduce the amount of the retailer’s credit line or even require cash up front before shipment of goods.

The noise of the politicians is simply pandering to the public with respect to actions they will never take. After all, this is an election year and behind the scenes they are seeking campaign contributions from the same companies and executives they publicly bash. The faux outrage is all posturing and no laws will be changed. Any little guy who believes these loudmouth politicians are looking after them is a complete fool.

[Texicanus]

I’m so old I remember when Boards of Directors only gave bonuses for exceptional performance. Nowadays it’s money for nothing and the girls are free.

After the carcass is picked clean by the creditors, the employees might still get something. Perhaps a “Thank you” card for their loyal service to the company (while the executives partied on like it’s 1999).

Mama said there are no free lunches and you can’t get blood out of a turnip. These are generally good rules to live by unless progressive judges and courts are involved. Then business contracts get tossed aside for political correctness considerations.

Best advice I know is “Investors as well as employees have got to know their limitations”. (Forgive me Clint Eastwood.) In a capitalist society you could lose your investment. It’s not like today where they teach at the grade school level “We are all equal and everybody is a winner”. They aren’t and they aren’t.

It’s quite oblivious there is some racism involved here. /s

[TBP]

It would be nice, if Toys “R” Us can afford to do it. I’m not sure if they’re entitled to it.

[leaning conservative]

Excellent post! We are lucky to live in a county that has a lively town square full of shops & restaurants. It is safe & charming. We make sure we spend money at local businesses because they’re important to quality of life in a town.

The service is almost universally excellent because they are their business.BUT then you have the fast food chain Chick fil A. Every restaurant has the same clean, well spoken & polite employees. Every one. So why don’t other businesses emulate their customer service? Too lazy? Unwilling to put in the time to train, let employees know they expect excellence or you no longer have a job. I assume franchise owners are in it to make $$$$$.......even more reason to do it correctly.

[leaning conservative]

My post is a hot mess, but you get the gist.

[discostu]

Severance is paid by companies with money. Bankrupt companies don’t have money. Therefore...

[lastchance]

Thanks that does put your answer in a much better perspective. I think many people go into denial mode even when disaster is obvious. Perhaps always having a back up plan would be a good life lesson.

[sparklite2]

What they did is illegal in some states, and for good reason.