Toys ‘R’ Us workers go to Congress to seek curbs on buyout  firms

Bloomberg

Fired Toys ‘R’ Us Inc. workers took their travails to Congress to press for changes in the way private equity deals are structured.
Potential US presidential candidates Kirsten Gillibrand and Cory Booker, and Minority Leader Chuck Schumer were among Democratic senators who met with former staff members and workers’ rights groups. The ex-employees are asking for new leverage limits on private equity deals, along with a worker-protection tax and profit clawbacks that would fund payments in situations similar to the one now playing out with the demise of the private equity-owned US toymaker.
The fact that this issue is even on the agenda highlights the leftward pull on the Democratic Party, and the consternation following the meltdown of a major retailer that left 33,000 workers without severance pay. Lawmakers are taking notice.
“We need to fight for all workers who are being treated like the Toys ‘R’ Us employees, who are bearing the personal economic costs of corporate greed run amok,” Senator Gillibrand said in a meeting organised by Rise Up Retail and the Center for Popular Democracy, which represent retail workers.
“I will keep doing everything I can in the Senate to make that happen.”
In a joint meeting with Senators Booker and Bob Menendez, several workers, wearing blue and purple Toys ‘R’ Us or Babies ‘R’ Us shirts, asked the legislators to take action to prevent similar scenarios. Besides broader industry legislation, they asked that lawmakers urge creditors and the buyout firms to contribute to a hardship fund for the laid-off Toys workers.
Menendez said he and Senator Booker are considering specific policy proposals and may offer an amendment to the fiscal 2019 appropriations bill set for a vote in the coming days.
“Judging the entire private equity industry based on one company or experience ignores the vast value created by private equity and their overall track record of growing businesses,” said Emily Schillinger, a spokeswoman for the American Investment Council, a Washington group that represents the firms.
“Private equity firms are investing in every state across our country and working to create jobs and grow businesses — including previous retail investments.”

Bankruptcy Criticism
Critics of the US bankruptcy process say the system offers rich compensation to the executives and advisers in charge of dismantling a company, but little to rank-and-file workers who stay on to assist in winding down operations. Representatives for the former employees are trying to tap a pool of $180 million earmarked to pay lawyers, advisers and suppliers.
Representatives for the Wayne, New Jersey-based company didn’t respond to messages seeking comment.