Landlords looking to get compensated in Toys “R” Us’s bankruptcy case, get in line.
The toy retailer is expected to pay $348 million to dozens of bankers, lawyers and consultants who tried to fix the company’s problems. And those bankruptcy professionals get priority and are largely assured of getting paid as other creditors fight to get their share, the New York Times reported.
This is nothing particular to Toys “R” Us, as bankruptcy fees have been an issue for years.
“The fees have been increasing, and there is no effective means to control them,” Lynn LoPucki, a bankruptcy professor at the University of California, Los Angeles, told the Times.
Companies can make the decision as to where they want to file for bankruptcy, and judges are hesitant to push back on fees because lawyers could bring the cases elsewhere. Toys “R” Us is based in Wayne, N.J., but filed its Chapter 11 case in Richmond, Va.
The retailer earlier this year announced it planned to close all of its 735 stores, including ones in College Point, Queens. [NYT] – Rich Bockmann