Toys R Us is expected to pay as much as $348m for the bankers, lawyers and consultants used over the past year.
Toys R Us’ swift downfall has been particularly painful for the company’s more than 30,000 employees, who are losing their jobs as the company shuts its doors across the United States in the next few weeks.
The store workers say they will not receive severance, even though many say they were originally promised modest payouts. In the final days, Toys R Us is paying many employees for full-time work, but not requiring them to come into the office if they aren’t needed.
Vendors are struggling to get paid for their toys and landlords are scrambling to find new tenants for the stores that Toys R Us is leaving behind. Bankruptcy professionals are largely assured of getting paid.
Meanwhile, CEO David Brandon and at least eight other senior executives will exit the bankrupt chain today, having shared $8.2m in rentention bonuses.
Companies can choose where they want to file for bankruptcy. Toys R Us, based in Wayne, NJ, filed its Chapter 11 case in federal court in Richmond, Va., which has a reputation for approving large professional fees.
Toys R Us bankruptcy lawyers from Kirkland & Ellis said in a court filing last year that they were charging as much as $1,745 an hour in the case. That was 25% more than the average highest rate in 10 of the largest bankruptcies in 2017, according to an analysis by The New York Times.
Bankruptcy professionals say that working to reorganise or liquidate a company is time-consuming, complicated and intense. Toys R Us is made up of multiple corporate entities — in the United States and internationally — that have hired lawyers and advisers. So far, the company said, it has shelled out $108m on professional fees.