Employees assist shoppers at the check-out counter of a Toys R Us store in New York.



Toys R Us workers who lost their jobs when the heavily indebted retailer collapsed are talking to two buyout firms about a possible hardship fund — but a third, billionaire investor Steven Roth’s Vornado Realty Trust, is refusing to answer their emails.

KKR and Bain, which took the company private in partnership with Vornado in 2005, are considering providing some financial help for workers who were hardest hit by the toy chain’s bankruptcy last year and ultimate liquidation. Criticism over the treatment of workers has led some public pension funds in the US to reconsider investments with the two firms.

Vornado, which was an equal partner with KKR and Bain in the leveraged buyout that loaded the retailer with more than $5bn of debt, has shunned discussions with representatives of former employees, according to people familiar with the talks.

Vornado is structured as a permanent capital vehicle and does not raise outside money on a regular schedule, so has not experienced the same pressure from investors.

Creditors seized control of Toys R Us in April, announcing the closure of all its stores and telling 30,000 fired workers they would not be receiving the severance benefits they expected.

Former employees are trying to enforce their claims against the retailer in bankruptcy court. But they are unlikely to have any legal recourse against the trio of former owners, whom they contend are also to blame.

Instead, they have mounted a ferocious campaign of public criticism, and worked to apply pressure via the buyout funds’ investors.

Workers and their representatives have scheduled meetings with Bain Capital investors in California, Ohio, Maryland and Pennsylvania, who have collectively provided the firm with about $2bn since 2012, to press their concerns. Two state-run pension funds, in Minnesota and Washington, are already reconsidering future investments in KKR funds.

Laid-off workers plan to take the argument to Vornado on Friday. They will hold a protest rally at a San Francisco office tower that is co-owned by the fund.

Jim Baker, a campaigner at the Private Equity Stakeholder Project, said he had contacted Mr Roth five times since workers wrote their letter in April, but received no reply.

Mr Roth could not be reached for comment; Vornado did not reply to a request for comment.

Industry experts say any hardship assistance for Toys R Us workers would probably have to come from buyout executives’ own pockets, because the funds cannot demand money from clients to cover payments they have no legal obligation to make.

The dialogue over a hardship fund was welcome, said Eddie Iny, a co-ordinator of the Rise Up Retail campaign that focuses on low-wage workers. But he added that it was likely to fall short of the $75m in severance benefits that workers had been counting on.

“We hope that KKR and Bain will do more and call on Vornado and the creditors to join this effort and contribute their share towards the laid-off Toys R Us workers and their families,” Mr Iny said.

KKR wrote to 10 congressional Democrats earlier this month stating its “desire to help” those who lost their jobs in the Toys R Us bankruptcy. “We believe we have found a path outside of the bankruptcy process to help those who need it the most,” the firm said.

Bain Capital declined to comment, but people familiar with the discussions said its representatives had also joined talks with workers.

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