Payments to 33,000 fired workers may depend on suing managers.

Toys R Us won court approval on Tuesday for a bankruptcy exit plan that ties creditor recoveries – including severance pay for 33,000 fired workers – to lawsuits against the defunct retailer’s former officers and directors.

The decision by US Bankruptcy Judge Keith L. Phillips means a litigation trust will be set up to try to hold Toys R Us’ former managers responsible for the company’s demise by suing them. Under a settlement approved by Judge Phillips in August, that trust can also go after officers who worked for the company’s owners, Bain Capital and KKR & Co. which led a 2005 leveraged buyout that saddled Toys R Us with $5b in debt it couldn’t repay.

No matter how much that trust raises, however, the fired workers “expect to get just a fraction” of the $75m they claim they are owed, said Carrie Gleason, policy director for the labour activist group, Organization United for Respect.

“We know that working people are at the bottom of the barrel in the bankruptcy process,” Carrie said in an interview as the court hearing began.

Under the wind-down plan for the US operation of Toys R Us, before much money can be paid to former employees, senior lenders need to collect about $1b. The staffers can tap a pool of $180m designated to pay post-bankruptcy bills, but they will be competing with other creditors, like toy suppliers as well as the lawyers and financial advisers who helped dismantle the company. The suppliers alone are entitled to more than 85% of the pool at its current size.

Lenders will take over the Toys R Us name and other intellectual property, the only assets left of the US business after the company liquidated hundreds of stores and sold its businesses in Canada and Europe. The Asia operation will be sold under a separate reorganisation plan that comes before Judge Phillips later this month.