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John Connaughton, co-managing partner at Bain Capital, said that the decision to establish a $20 million fund to help workers who lost jobs when Toys “R” Us Inc. shuttered was the result of a unique set of circumstances, Bloomberg reported. Connaughton said that Bain, which owned the retailer along with KKR & Co., wanted to recapitalize Toys “R” Us within chapter 11 bankruptcy proceedings but that creditors opted to liquidate the company. So Bain and KKR decided to each contribute $10 million to a fund to pay severance to former employees because it was “the right thing to do.” “It’s just unique and exceptional in this context for the creditors as well as the company to be in this position where it was taken out of their hands,” Connaughton told Bloomberg Television Wednesday. Toys “R” Us shuttered its last stores at the end of June, and its liquidation left more than 30,000 workers without expected severance payouts.

Former Appvion Inc. executives and advisers have been accused in a lawsuit of cherry-picking financial data that inflated the value of the paper maker’s now-worthless employee stock plan as the company skidded to bankruptcy, WSJ Pro Bankruptcy reported. The civil lawsuit seeks to recover money for current and former Appvion workers who invested in an employee stock ownership plan that was wiped out in bankruptcy. The legal action was brought by a trust created by the company’s chapter 11 plan, approved by a judge earlier this year. A version of the lawsuit, which is partially redacted, was filed yesterday in Wilmington, Del. Trustees Alan D. Halperin and Eugene I. Davis contend former Appvion directors and senior management were motivated in the years before the company filed for bankruptcy in October 2017 to present “fantastical” financial projections to advisers because their compensation packages were tied to the valuation of the business.

After months of acrimonious bargaining with its unions, FirstEnergy Solutions convinced a bankruptcy judge on Friday to approve a $126 million bonus plan the company said it needs to encourage nuclear power plant employees to stay on the job until the company closes the plants in 2020 and 2021, the Cleveland Plain Dealer reported. Bankruptcy Judge Alan Koschik approved what the company described as a compromise that it reached with creditors and with three unions representing employees at the Perry nuclear power plant east of Cleveland, the Davis-Besse nuclear plant near Toledo and the Beaver Valley two-reactor plant near Pittsburgh. The company had initially submitted a $100 million bonus plan, which did not include bonuses for any unionized employees. A top FES executive, under oath, testified that it “just happened” that no union employees were chosen in the company’s original bonus plan. Judge Koschik threw out that plan after union lawyers argued it was an example of class discrimination and after the company could not answer critical questions from the court about how it chose each employee to receive a bonus.

Employees of Sears Holdings Corp., inspired by the hardship fund for workers affected by the collapse of Toys “R” Us Inc., are asking Chairman Eddie Lampert and the firms involved in the chain’s bankruptcy to preserve jobs and stores as well as guarantee severance pay and pensions, Bloomberg reported. “While we understand that Sears and Kmart must make changes to survive, we do not believe it is fair that financial firms stand to profit from Sears’s bankruptcy while employees like us are asked to sacrifice,” the workers said in a letter addressed to Lampert. It was signed by 62 current and former employees. Sears says it has no plans to liquidate after filing for chapter 11 protection in October, but it has been closing stores and cutting jobs as part of that process. It’s still working to keep several hundred outlets alive as part of Lampert’s plan to buy the company out of bankruptcy. Sears has lost billions of dollars since Lampert combined the Hoffman Estates, Ill.-based company with Kmart in 2005.

Top lawmakers are considering a taxpayer-funded bailout for retirees who are members of certain failing pension plans, scrambling to solve a retirement crisis that threatens more than 1 million Americans. A draft of the plan, obtained by the Washington Post, would direct the Treasury Department to spend up to $3 billion annually to subsidize payments for retirees from certain underfunded pensions. It would also require benefit cuts, higher premiums and new fees levied against companies and union members in an attempt to make the pensions as financially solvent as possible. The proposal aims to require all parties involved to make significant concessions and caps taxpayer contributions.

U.S. public pension funds are taking on more real estate, and at times some of the riskiest types of property investments, as they try to close their funding gaps, the Wall Street Journal reported. American public plans with more than 20,000 members had an average 7 percent of their assets in real-estate investments at the end of 2017, according to a Wall Street Journal analysis of Boston College’s Public Plans Data, which contains the most recent numbers available. That is up from 4 percent in 2006, representing more than $120 billion in additional pension money flowing into real estate. Some of this increase is due to the construction of new properties designed to be sold later for a profit. These so-called opportunistic investments by pensions grew nearly sixfold between 2006 and 2016 even as allocations to “core” existing properties remained flat, according to an analysis by CEM Benchmarking.

Thousands of former Toys R Us workers will receive severance payments from a new $20 million fund, the Washington Post reported. The move is considered rare among private-equity-backed companies that file for bankruptcy. Even so, the amount pledged is well below the $75 million a workers rights group says those who lost their jobs are owed. Bain Capital and Kohlberg Kravis Roberts announced yesterday that each had committed $10 million to a fund for former Toys R Us workers. Bain and KKR are two of the three firms that bought Toys R Us in a 2005 leveraged buyout and loaded it up with billions of dollars in debt before liquidating the chain in June. One hundred percent of contributions to the fund will be paid directly to eligible employees. The fund is structured so that other “interested parties” can contribute. A third Toys R Us owner, Vornado Realty Trust, did not immediately respond to a request for comment on whether it would give to the fund.

The Pension Benefit Guaranty Corp. (PBGC) on Friday reported a surplus in its single-employer program for the first time in nearly two decades in fiscal 2018 on the back of higher interest rates, the Wall Street Journal reported. The PBGC's single-employer program had assets of $109.9 billion and liabilities of $107.5 billion as of Sept. 30, resulting in a net surplus of $2.4 billion. The program insures 23,400 plans that cover 26.2 million people. This is the first surplus since 2001 and came as a result of stronger U.S. economic growth, lower than expected claims and higher interest rates, said PBGC Director Thomas Reeder. “Every year since then we’ve been in deficit because of failures of large plans and changes in the market,” he said. That risk remains on the horizon, as there are a number of non-investment-grade companies that sponsor underfunded defined-benefit plans, Reeder said. One such company, Sears Holdings Corp., filed for bankruptcy protection last month. Sears has two pension plans that held a combined $2.5 billion in assets and had a funding shortfall of $1.5 billion at the end of 2017. The company hasn’t terminated its plans and retains responsibility for paying the roughly 90,000 workers and retirees covered by the plans.