Credo Action

Stand with Sen. Warren: Demand justice for Toys R Us workers

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Petition to hedge fund creditors of Toys R Us:

"Contribute significant financial resources to a hardship fund for the Toys R Us workers whose jobs you eliminated and come clean about the decision to liquidate the company."

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    Stand with Sen. Warren: Demand justice for Toys R Us workers

    Toys R Us is no more, and Sears is on the verge of death. More than 30,000 Toys R Us workers just lost their livelihoods.1 In the last decade, 175,000 people lost their jobs at Sears, with more to come.2

    These iconic brands didn't die a natural death. It wasn't competition from online retailers. Hedge funds killed them and profited from their demise.

    In the case of Toys R Us, there was a buyer ready to purchase the company and preserve at least half of the jobs. But a handful of hedge funds decided the company was worth more dead than alive and blocked the deal.3

    Now, Sen. Elizabeth Warren is demanding justice for the laid-off workers.4 We need to stand with her and demand that these predatory hedge funds pay out severance to all those whose livelihoods they stole.

    Stand with Sen. Warren: Demand justice for Toys R Us workers.

    The popular story is that both companies fell victim to competition from online retailers. Don't believe it.

    In the case of Sears, a former Goldman Sachs banker named Eddie Lampert merged the company with Kmart. He loaded both up with debt and used the borrowed money to buy back the company's stock, which drove the price higher and made him rich. His hedge fund also made millions off of commissions and fees for its loans to Sears. Now, the company is bankrupt and the job losses could total well more than 200,000 – but Lampart's net worth is around $2 billion.5

    The death of Toys R Us started with a group of hedge funds and private equity firms – practically the same thing these days – buying the company with borrowed money and then pushing the debt onto the company itself. The hedge funds made money while the company spent all its profits paying interest. Despite sales remaining steady, Toys R Us sunk deeper into debt.6

    A few hedge funds bought that debt – in some cases, for less than 50 cents on the dollar – and demanded the company pay in full. As Toys R Us teetered, they decided that they would make more money by liquidating the company than by going into bankruptcy or making a sale that would save jobs.7

    The decision cost more than 30,000 people their livelihoods. When Toys R Us closed stores in the past, it usually paid severance. The hedge funds that killed the company owe the same to workers today. Two firms, Bain Capital and KKR, have pledged to pay into a hardship fund.8 Now we need to help Sen. Warren turn up the heat on the rest of the predatory hedge funds and force them to do right by workers.

    Stand with Sen. Warren: Demand justice for Toys R Us workers.

    Thank you for speaking up for Toys R Us workers.

    References:

    1. Sen. Elizabeth Warren, "Letter to Steven Roth," Oct. 16, 2018.
    2. Robert Kuttner, "It Was Vulture Capitalism That Killed Sears," The American Prospect, Oct. 16, 208.
    3. Sen. Warren, "Letter to Steven Roth."
    4. Kuttner, "It Was Vulture Capitalism That Killed Sears."
    5. Sen. Warren, "Letter to Steven Roth."
    6. Ibid.
    7. Ibid.
    8. Ibid.