Bankruptcy Professionals $348 Million – Employees $0

By on May 14, 2018

May 14, 2018

When Toys “R” Us tried to refinance about $200 million of its total $5 billion in debt about a year ago word got out that it had hired restructuring advisers. That started a downward spiral that ended in bankruptcy last September. Now the company is on the hook for $348 million to the many lawyers, bankers and consultants that tried to fix its problems. It’s 30,000 employees are out of a job and most of them will get little or nothing. Store workers severance will consist of payment for full time work but no requirement to show up for the last two weeks the stores are open. Some creditors will get next to nothing as well. Lawyers are charging as high as $1,745 an hour in the case, 25 percent more than the average highest rate in 10 of the largest bankruptcies in 2017, according to an analysis by The New York Times. The company’s problems date back to a 2005 leveraged buyout by private equity firms Bain Capital and Kohlberg Kravis Roberts and Vornado Realty Trust. Loan payments ate up cash that it could have spent on updating its stores and building its website so it could compete with Amazon.
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The New York Times

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