Toys R Us Workers Win $2M for Severance

RICHMOND, Va.—A federal judge has awarded $2 million to a group of former Toys R Us workers whose promised severance pay was cancelled in the company’s bankruptcy proceedings, lawyers for the group said June 27. U.S. Bankruptcy Judge Keith L. Phillips of the Eastern District of Virginia issued the award after the workers filed a class-action suit to demand that their severance pay get the same priority in distributing the defunct company’s remaining assets as claims for legal and administrative fees. “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,” Jack Raisner, a lawyer for the workers, said in a statement. “It points to holes in the laws and bankruptcy process that prevent us from getting paid in full. The system is rigged against us. That has to change.” Kirkland & Ellis, the law firm that represented Toys R Us, got awarded $56 million in fees. Almost all of a bankrupt business’s creditors generally get paid before workers’ benefits are covered; the only category with a lower priority is shareholders. Read more