A bankruptcy trust for creditors who lost money in the Toys “R” Us Inc. bankruptcy sued former Chief Executive David Brandon and several directors tied to owners Bain Capital LP, KKR & Co. and Vornado Realty Trust, alleging that they siphoned money out of the company before it went under, the Wall Street Journal reported. The lawsuit also accused Brandon and other Toys “R” Us executives and board members of conspiring to keep the company’s suppliers in the dark about its dire financial straits in the months before it collapsed. As a result, suppliers and other creditors lost $800 million, according to the complaint. Toys “R” Us filed for bankruptcy in September 2017 and liquidated in March 2018, leaving behind a pile of unpaid bills, mostly to vendors. Bob Bodian, an attorney who represents the Toys “R” Us executives and directors, said they “acted in the best interest of the company and its stakeholders.” The lawsuit is a “misguided effort to pressure insurance carriers to pay meritless claims,” he said. When Toys “R” Us filed for bankruptcy in 2017, the company touted its access to $3.1 billion in bankruptcy loans but quickly defaulted on the loan, leaving many suppliers and other creditors with $800 million in unpaid bills, the largest amount ever in a chapter 11 case, according to the lawsuit.
