One year after Toys R Us shut its doors, a group of workers who lost their jobs are set to receive a $2 million severance settlement.
Judge Keith L. Phillips of the Eastern District of Virginia on Thursday approved the settlement for 33,000 employees who were laid off after the toy company filed for bankruptcy last year.
The settlement was the result of a class action claim filed last year by Ann Marie Reinhart Smith, a 30-year Toys R Us employee, on behalf of all employees laid off without severance.
“After being so loyal to the company, to be let go without our promised severance is disrespectful,” Reinhart Smith said in a statement. “We’re grateful we achieved this class-action settlement. It’s an important milestone for working families like mine who are so vulnerable to Wall Street’s greed.”
Last year, Reinhart Smith, a grandmother from North Carolina, became the public face of laid-off Toys R Us employees, and appeared in news articles and met with Sen. Bernie Sanders, on behalf of the workers.
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On Thursday, Reinhart Smith called the settlement “bittersweet” and said the case highlights what she described as holes in the bankruptcy process that prevents employees from being paid in full.
Jack Raisner, a partner in the law firm Outten & Golden LLP that represented the workers, echoed a similar sentiment.
“After nearly a year, employees laid off by Toys ‘R’ Us are finally getting something to show for their steadfast service,” Raisner said in a statement. “It’s a shame they aren’t getting more, but this settlement sends a message that employees deserve a place in the front of the line of creditors when businesses fail, and that is important to people who work in retail and their families.”
About 33,000 workers, many of whom stayed at their jobs in the U.S. stores until the end of June 2018 when all stores closed, had said they originally were promised severance when the liquidation was announced, but soon after were told no one would receive the payout.
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After pushback from workers groups, two private equity owners of the iconic toy chain, KKR and Bain Capital, set up a $20 million hardship fund for the thousands of former workers last fall. The fund wasn’t legally required, and the workers backing the groups called it an “unprecedented” step toward helping families caught up in the store closures and bankruptcies that have roiled the fast-changing retail industry.
This week’s settlement is the latest in the retailer’s retailers’ year-long bankruptcy case, which is in its final stages.
In February, former Toys R Us executives announced the start of a new company called Tru Kids Inc. that will be doing business as Tru Kids Brands. Last week, Bloomberg reported the company was looking to open a half dozen stores and a new e-commerce site ahead of holiday shopping.
Contributing: Associated Press; Kelly Tyko
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