Executives at Toys R Us are facing a lawsuit to the tune of $1.1billion in damages, filed this week by a group of creditors dubbed the TRU Creditor Litigation Trust.
The suit claims that CEO executives at the former retail giant had ‘lined their pockets with company funds on the eve of its 2017 bankruptcy, to a sum of $16 million.’
It has accused the Toys R Us chief executive, David Brandon and other execs at the business of scoring bonuses that boosted their total pay by 75 per cent, claiming that Brandon took home $2.8 million.
In contrast, the retailer’s vendors ‘barely received 20 cents on the dollar in the company’s bankruptcy.’
The suit has also claimed that Brandon began arranging for the board-approved bonuses a few months prior to its bankruptcy, back in July 2017, while Toys R Us losses were mounting.
According to the New York Post, the lawsuit goes on to cite emails showing Brandon boasting that Toys R Us’ backer Bain Capital had ‘let him invest in their funds and deals without charging him the same fees required for institutional investors.’
The suit has also highlighted Toys R Us’ former chief merchandising officer, Richard Barry – now president of the new Toys R Us business and owner of the trademark – for fraudulently misleading toy manufacturers to send the company merchandise before it filed for bankruptcy protection.
“At all times, the former directors and officers of Toys R Us and members of management acted in the best interests of the company and its stakeholders,” said the director’s lawyer Bob Bodian in a statement.
“Because none of the named defendants has any financial exposure, this lawsuit is just a misguided effort to pressure insurance carriers to pay meritless claims. We will defend against this baseless lawsuit vigorously.”
The plaintiff’s lawyer, Greg Dovel of Dovel & Luner, said: “The toy makers want a public trial and for these executives to be confronted with what they did.”