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Toys ‘R’ Us Workers Face Harsh Reality in Quest for Severance

  • Bankruptcy rules may block payments for 33,000 fired workers
  • Critics say system rigged in favor of powerful investors
A Toys 'R' Us store at Times Square in New York on May 11, 2018. 

A Toys 'R' Us store at Times Square in New York on May 11, 2018. 

Photographer: Jeenah Moon/Bloomberg
Updated on

Toys “R” Us’s fired workers last week won the right to negotiate for severance money in bankruptcy court, in an unusual victory. They may end up getting nothing.

Before much money can be paid to the retailer’s 33,000 former employees, senior lenders need to collect about $1 billion. For now, the staffers can try to tap a pool of $180 million designated to pay post-bankruptcy bills, but they are competing with other creditors, like toy suppliers and the lawyers and financial advisers helping to dismantle the company. The suppliers alone are entitled to more than 85 percent of the pool at its current size.