TOTOWA — Toys R Us was victimized by venture capital firms that buried the retailer in debt and cashed in when it failed, said New Jersey’s two United States senators and the congressman who for many years represented the hometown of the toy selling giant.
Sen. Bob Menendez, Sen. Cory Booker and Rep. Bill Pascrell, all Democrats, joined about a dozen employees who have been laid off or face that fate later this month for a news conference in the Route 46 parking lot outside Toys R Us and Babies R Us stores.
“This storied New Jersey company was run into the ground by a bunch of corporate raiders looking to turn a profit,” said Menendez, of Paramus. He said 735 stores, including 20 in New Jersey, would close at the end of this month because of the way venture capital firms KKR, Bain Capital and Vornado Realty Trust sharply increased the company’s debt and took out profits.
Pascrell, who for years represented the Township of Wayne where Toys R Us was headquartered, called the investment firms “bozos” and said the lawmakers were writing to federal banking regulators asking for tighter oversight of leveraged buyouts.
“You would think with all that money, KKR and Bain could pay a severance to the more than 30,000 Toys R Us workers they’re laying off,” Pascrell said. “But these executives are refusing to give their employees anything.”
He also said he and the senators will write to the firms asking them to reconsider the denial of severance.
“There is still time for this company to do right by its workers,” Booker said.
Cheryl Claude, a 33-year employee from South River who manages the warehouse at the chain’s Woodbridge store, has never had another job, and never prepared a resume. At the press conference, she said she was worried about whether she’ll be able to keep making payments on the car she’ll need to go on interviews for other jobs after the liquidation is complete later this month.
“I spent every holiday, every Christmas Eve, leaving my kids behind ... to be at work, to give them my 100 percent ... I mean, for Toys R Us to give us nothing, it’s disgusting,” said Claude, 53.
In an interview, she said workers are dealing with customers who become rude or angry when they offer less than the posted price and offers are rejected. Claude said she was called a racist by one customer when she refused to accept a return because of rules set by the bankruptcy liquidator.
Nancy Sadkin of Totowa, who is helping to close out the Babies R Us store a few hundred feet from the site of the news conference, held a sign reading “Fair Severance Now” as she stood behind the members of Congress.
“Considering all the top executives got millions of dollars, I think the workers should be entitled to something, whether it’s one week’s pay for every year they’re there or more,” Sadkin, 51, said in an interview. “We’re the ones dealing with the angry customers when they can’t use their gift cards, their reward dollars. We’re dealing with the upset kids because there’s going to be no Toys R Us for them to play at.”
Lillian Turkousky, 71, could not attend the event because she had to be at her other part-time job as a crossing guard and recess attendant at the elementary school in her hometown of Haledon.
A 19-year employee who works as a greeter and assists with children’s events, she said one 7-year-old was upset about the store’s closing and did not want to hear that toys could still be bought at stores such as Target or Walmart.
“I said, ‘I’m sorry honey but I can’t do anything about it,’” Turkousky said. “She said, ‘I feel bad about you losing your job. Why don’t you call Santa Claus at the North Pole and get a job with him?’”
Turkousky said she had to run off the floor to avoid breaking down in tears in front of the child.
Booker said the situation raises “a moral question” that the United States needs to confront about whether “so many big finance firms could saddle a company with debt, collect exorbitant fees, negotiate away the future of tens of thousands of workers and then, when the company goes south, walk away with hundreds of millions of dollars of profit.”
Booker, however, caused a stir in 2012 when he appeared on NBC’s Meet the Press and used the word “nauseating” to describe attacks from President Barack Obama’s re-election campaign on Bain Capital, a company that Republican presidential candidate Mitt Romney helped build.
Booker also received $23,600 in contributions in 2014 and 2015 from Bain employees.
Asked about his defense of Bain and the contributions, Booker said he rejected “unsophisticated broad-brush-painting” of venture capitalists, and the contributions were from “people I’ve probably known a long time.”
He said he was contacting some of the people he knows at Bain to try to get the workers better treatment.
“But let’s be clear: I’ve never been shy about attacking practices that are hurting people, that are contrary to justice, that are contrary to the best interests of our economy and of our country. And so I don’t care who it is, if you’re doing wrong by workers, if you’re engaging in things that I think are unjust, I’m going to call it out unflinchingly,” he said.
Workers were not optimistic that the lawmakers’ actions would make a difference in their situations, but they said they had no hesitation about being at the event, which for many was the first public protest they’ve ever joined.
“If we can even change the way it’s done for the future for other people, then it’s worth doing this,” Sadkin said. But after the bankruptcy, toy vendors became skittish and refused to ship, customers thought the stores were already closed, and Christmas 2017 sales were dismal.
That led bankers who provided the funding to keep the company operating during the bankruptcy to say the Toys R Us turnaround plan was no longer working.
In January, Toys R Us announced it would close 182 stores, and began the first round of going-out-of-business sales. That round included a Toys R Us in Wayne and a Babies R Us in Paramus, which closed in March.
On March 15, under more pressure from the bankruptcy lenders, Toys R Us announced it had no choice but to liquidate or sell the entire company. The approximately 1,000 employees at the Wayne headquarters were given two months’ notice of termination.
Store employees also said they had been told they would not receive severance, although there were some provisions in the bankruptcy proceedings for unspecified bonuses to store managers to remain until the liquidation sales were completed.
Toys R Us got into financial trouble following a 2005 leveraged buyout that saddled the company with over $5 billion in debt. Private equity and investment firms KKR, Bain Capital, and Vornado Realty Trust took what had been a public company private in a $6.6 billion deal in which most of the purchase cost was borrowed and charged back to Toys R Us.
Posted June 01 2018 at 3:41 PM Permanent Link