- U.S. Sens. Cory Booker and Elizabeth Warren are demanding answers from Bed Bath & Beyond on how it handled worker severance and stock buybacks as the company slid into Chapter 11 earlier this year. In an open letter published last week, the lawmakers said the company is “failing to treat retail employees with dignity in the bankruptcy process.”
- They are asking CEO Sue Gove and the company to commit to paying employee severance and benefits. Booker and Warren also called for the company to disclose by July 19 how many layoff notices it's issued in the last 18 months, and to also report how much was spent on stock buybacks and dividends since 2014.
- As the company continues to move through bankruptcy, “the workers who ran your business, staffed your retail stores, and fulfilled online orders are being forced to shoulder the brunt of the losses, while shareholders and some executives walk away unscathed,” the senators said.
Booker, who represents New Jersey, and Warren, who represents Massachusetts, say the company spent nearly $12 billion on stock buybacks since 2004. Even as the business struggled in the year before filing for bankruptcy, Bed Bath & Beyond continued to put millions into buybacks. The company's actions, the Democratic lawmakers said, placed the interests of shareholders ahead of thousands of frontline retail workers by denying them severance payments and benefits as stores closed and employees were let go.
Booker and Warren also criticized Bed Bath & Beyond’s decision to lay off nearly 1,300 workers on April 9, one day before a new law in the company’s home state of New Jersey went into effect that mandated guaranteed severance and enhanced protections for employees who are laid off.
“While your company has, under enormous public pressure, reversed course in New Jersey and agreed to recognize the newly expanded protections, employees in other states have reported being denied severance pay and other benefits they promised,” the senators said.
The lawmakers also highlight media reports from across the country about Bed Bath & Beyond’s denial or inability to pay the severance and retirement benefits that employees were due. The company also faces at least two lawsuits related to its failure to make good on its obligations to employees.
In March, Michael Palmeri, a former store manager, sued the company, saying the retailer failed to give proper notice of mass layoffs when Bed Bath & Beyond decided to close down its entire 50-store chain of Harmon beauty stores. Palmeri alleged violations of both the federal and state Worker Adjustment and Retraining Notification Act.
Also that month, former Bed Bath & Beyond CEO Mark Tritton sued the company in New York state court. In his lawsuit, Tritton accused the company of stopping bi-monthly payments of his $6.76 million severance agreement. In court documents, the retailer acknowledged it stopped paying Tritton. Court documents indicate the lawsuits are on hold due to Bed Bath & Beyond’s ongoing bankruptcy.
Derek Jacques, a bankruptcy attorney with The Mitten Law Firm in Detroit, told Retail Dive in emailed comments that employees are normally paid after bankruptcy costs and secured creditors. Secured creditors are those that have loaned the company money against real property such as office buildings or other physical property. “If the physical property is not enough to settle the debt, then these creditors are entitled to be paid before others out of any remaining company money that may exist,” Jacques said.
Although affected workers may receive partial compensation, “the full amounts may never be paid,” Jacques said. “Employees do have a right to file suit in these circumstances, however, suing an insolvent company will just cost the employees in legal fees.”
Retail Dive could not reach Bed Bath & Beyond representatives for comment. An email sent on Monday seeking comment from the company received an automated reply indicating that the inbox was no longer regularly monitored. Requests for further comment from Sens. Booker and Warren were also not immediately returned. The Nasdaq plans to delist Bed Bath & Beyond on July 20.