The private equity owners of Toys “R” Us may be taking unprecedented steps toward supporting the company’s former workers, but the lenders that financed its bankruptcy — and ultimate liquidation — are making no such promises, Bloomberg News reported. Angelo Gordon & Co. LP and Solus Alternative Asset Management don’t plan to contribute any more cash to benefit Toys “R” Us employees who were left jobless when the biggest U.S. toy retail chain shut down, according to an Aug. 21 letter reviewed by Bloomberg. The letter from lawyers at Wachtell, Lipton, Rosen & Katz came in response to two worker advocacy groups who asked the hedge funds last month “to take responsibility by ensuring that Toys “R” Us employees receive the money that they had been counting on.” In court, the defunct chain’s 33,000 workers have been seeking the same treatment as creditors, who customarily are given high priority under the Bankruptcy Code because their services are considered crucial to winding down a company. They’ve been competing for a the shrinking pool of cash left at Toys “R” Us with traditional administrative creditors, who would likely oppose the effort since they’d be less likely to get full payment on their own claims, and there’s already doubt about whether there’s enough to go around even before the workers are considered.
