Toys R Us owners KKR and Bain Capital to pay $20m to laid-off employees

Two former owners of Toys R Us have agreed to pay $20m (£15.6m) to employees who lost their jobs following its collapse.

KKR and Bain Capital have set up a severance fund in the US after the $6.9bn toy store chain filed for bankruptcy last year and confirmed it would close all 800 US stores earlier this year with around 31,000 jobs lost.

The UK's 100 stores have also closed and around 3,000 jobs lost.

The pair, along with Vornado Realty Trust, bought the company in 2005 in a leveraged buyout but took it into liquidation in June this year.

KKR and Bain hired administration experts Kenneth Feinberg and Camille Biros, who delivered the 9/11 Fund and the BP Oil Spill Fund, have been hired to lead the fund's distribution.

Feinberg said: “This is a valuable and important step designed to provide a degree of financial relief to eligible former employees of Toys R Us.”

Workers earning less than $110,000 a year, who had been employed for at least one year will be eligible for the fund, the companies said.

KKR and Bain Capital said: “After being a part of the community and supporting Toys “R” Us for twelve years, and advocating for a very different outcome than what occurred, we are establishing this Fund in response to an extraordinary set of circumstances for both of our firms.

“The confluence of the disruption in retail, the push by the company’s secured creditors to liquidate the company’s U.S. operations, and the fact that we have never experienced something like this in the history of either firm, led us to try and find a way to provide some financial relief for former employees.”