By Jerri-Lynn Scofield, who has worked as a securities lawyer and a derivatives trader. She now spends much of her time in Asia and is currently working on a book about textile artisans.

Toys R Us will shutter all stores by the end of this month.

I wrote about the role private equity played in killing this venerable 70- year old New Jersey firm when it filed for Chapter 11 bankruptcy protection last September in Toys R Us: Another Private Equity Casualty. So I won’t repeat that sad and sorry tale here (but I will refer interested readers to this earlier post by Yves on the general trend, Private Equity Firms Sued Over Retailer Bankruptcies— and the earlier links included therein).

The purpose of this post is to discuss the consequences of this liquidation for the company’s workers. As Bill Pascrell, a New Jersey Democrat whose Congressional district included the company’s headquarters for 16 years until a 2012 redistricting landed it to another district, wrote in USA Today, Amazon didn’t kill Toys R Us, greedy Wall Street profiteers did it:

The so-called Retail Apocalypse can be attributed to Amazon and Walmart, but this is only part of the story. Another part belongs to private equity, whose methods of leveraging immense debt are wreaking havoc on the retail landscape. Toys R Us is the most recent victim. In 2005, three Wall Street firms paid more than $6 billion for the company, but only $1.2 billion came from their own pockets; the rest was borrowed. When Toys R Us was purchased, its new owners tethered that $5 billion of debt plus annual interest payments of $400 million to its neck. Finance executives justify leveraged buyouts by claiming that they allow ailing companies to become leaner and more financially nimble in a way that protects the business and its workers. But how could Toys R Us innovate or change course while weighed down by that anchor? In practice, these deals favor the equity tycoons who help themselves to enormous bonuses. Simultaneously, their new possessions are left holding debt they cannot pay. An otter cracks open a clam before discarding the shell, and so do these firms: Toys R Us owners reportedly walked away with more than $200 million. The shell is the American worker. Once private equity squeezes out whatever dividends it can, too often the businesses close. The shuttering of Toys R Us’ more than 800 stores will mean the loss of at least 30,000 jobs, including 1,600 in New Jersey. Worse yet, Toys R Us notified its workers that their severance plans were being nullified.

Protests and Expostulations

That means that now, more than 30,000 are without severance– even though the company paid out bonuses weeks before it filed for bankruptcy, according to a Saturday report in The Washington Post, ‘How can they walk away with millions and leave workers with zero?’: Toys R Us workers say they deserve severance:

On Friday, more than a dozen workers met with lawmakers in New Jersey, where Toys R Us is based, to push for severance pay. Workers also called for new regulations on leveraged buyouts, as well as windfall taxes that would prevent private-equity firms from running a business into the ground and then walking away with huge sums of money. In addition to meeting with lawmakers, employees are preparing to file a claim in bankruptcy court next week asking that they be fairly compensated, according to workers’ advocates at the Center for Popular Democracy.

On Friday, three New Jersey Democrats– Pascrell and Senators Cory Booker and Robert Menendez– sent a letter to the heads of Bain Capital, KKR, and Vornado, exhorting them to “do everything in their power to support the thousands of Toys ‘R’ Us workers who will soon lose their jobs as the company closes its doors. ” Fat lot of good this will do, I know.

As the Post notes:

“I have always been proud to work at Toys R Us, but this is not Toys R Us — this is KKR and Bain Capital,” Tracy Auerbach, a store manager in Chandler, Ariz., who has been working at the company for 31 years, said during a news conference on Capitol Hill last month. “This is Wall Street greed. How can they walk away with millions and leave 33,000 workers with zero?”

An excellent question. Permit me to quote two company employees on this issue, as reported by WBGO.org in Toys R Us Employees Protest For Severance Pay.

Let’s hear from 33-year employee Cheryl Claude of South River, New Jersey, who has never worked anywhere else: “I spent every holiday, leaving my kids home for the holidays, Thanksgiving, Christmas, birthdays, everything to be at work and give my one-hundred percent to get nothing is incredible.”

And Shkeanah Best, another company employee laments, ““We’re not receiving anything. Just unemployment and I don’t want to go that route. You don’t know how long it’s going to last. Unemployment doesn’t pay anything. It’s crazy how a big franchise is closing its doors and not offering us anything.”

Over to the Post again: