TOTOWA, NJ – U.S Congressman Bill Pascrell, Jr. (D-NJ-09) and Senators Cory Booker and Bob Menendez (both D-NJ) were joined on June 2 by Toys “R” Us workers and advocates in standing up for employees at the iconic New Jersey-based retailer after it was forced into bankruptcy following a leveraged buyout that saddled it with exorbitant debt. In a leveraged buyout, a company is acquired by a specialized investment firm using a relatively small portion of equity and a relatively large portion of outside debt financing.
In March, Toys “R” Us announced it would be closing its stores and laying off all 33,000 workers, including more than 1,500 in New Jersey. Toys “R” Us stated in a letter to employees that they will not pay out severance due to its financial condition.
Standing outside the Toys “R” Us store in Totowa today, Pascrell, Booker, and Menendez announced that they wrote to the private equity firms responsible for the Toys “R” Us bankruptcy challenging them to fully examine and adopt any measures to support employees as they transition out of their jobs.
“These private equity companies’ dismissal of the Toys R Us workers is a sin. They need to take the nearly half a billion dollars they sucked from the company and pay each of their 33,000 workers – including 1,500 in New Jersey – a severance for their loyal service. Today,” said Rep. Pascrell. “Throughout the country, private equity firms have destroyed cherished brands, diminished wages, widened the income gap, and cannibalized thousands of jobs while pocketing billions through slick schemes like leveraged buyouts. Policy must prioritize workers, not Wall Street executives. I am proud to join Senators Booker and Menendez in demanding that federal regulators ramp up the rules on private equity investors who act in predatory ways to destroy companies like Toys R Us while they turn a profit. Congress must close loopholes and reform risky practices being used or more companies will inevitably fall victim to Toys R Us’s fate.”
“America should work for people who work hard and play by the rules, but that bargain was broken for thousands of Toys ‘R' Us workers whose company was saddled with so much debt and fees from financial firms looking to pad profits that the company simply couldn’t succeed,” said Senator Booker. “Now, workers are being left with nothing while these same firms are in line to recover millions from Toys R Us’ liquidation. I stand in solidarity with workers who lost their jobs through no fault of their own and challenge these firms to provide workers the dignity they deserve through fair severance compensation.”
“This storied New Jersey company was run into the ground by a bunch of corporate raiders looking to turn a profit. They drained Toys ‘R’ Us of its resources and ability to adapt, and treated its workers, who spent years bringing smiles to the faces of our children and delighting them with everything from ‘bikes to trains to video games,’ as expendable, as afterthoughts, as collateral damage, leaving them with no jobs, no severance and no path forward,” said Senator Menendez. “When more than 30,000 workers lose their jobs while those at the top walk away with millions, something is seriously wrong. But these firms still have time to right these wrongs, to do the decent thing, and give these hardworking people and their families a fighting chance at landing on their feet.”
"I'm not sure what I'm going to do without my job once I'm done," said Cheryl Claude, an assistant manager at a Toys 'R' Us in Woodbridge, who has worked at the store for more than three decades. "My husband works at BJ Wholesale - to add me to his health insurance is going to be half his paycheck. I feel I have done so much and to get nothing after 33 years is just wrong."
"Wall Street caused the Toys 'R' Us bankruptcy, but working families are paying the price. It's not fair, it's not right, and that's why hundreds of these workers from all around the country are mobilizing today to hold KKR and Bain Capital accountable," said Carrie Gleason, director of the Fair Workweek Initiative at the Center for Popular Democracy. "They're standing up to win justice for the tens of thousands of people - mothers and fathers, veterans and students - who have put in decades for the company and deserve to be treated with dignity after a bankruptcy that happened through no fault of their own."
"Private equity and hedge fund managers on Wall Street are attacking workers, hurting our communities and putting our country at risk once again. We stand with the 33,000 Toys 'R' US workers who are losing their jobs after Bain Capital, Vornado and KKR raided the company and left the workers and their families with nothing," said Sara Cullinane, director, Make the Road New Jersey.
Rep. Pascrell has been a leading voice in Congress on forcing private equity and Wall Street to play by the rules. In April, he wrote a widely-disseminated op-ed for USA Today on how private equity firms destroyed Toys R Us, and warned that without proper reforms, more cherished retailers would be driven under by unregulated private equity practices.
As part of the ongoing weekend of action, on Sunday, dozens of Toys “R” Us workers from across the country will join local families to take over the Toy “R” Us store in Union to demand severance pay. On June 4, Toys “R” Us workers will hold demonstrations at the offices of major private equity firms that helped accelerate the Toy “R” Us bankruptcy.