Toys R Us wind-down entity sues DLT for self-insurance funds

A WIND-DOWN company for Toys R Us-Delaware Inc. has sued the state Department of Labor and Training to recoup excess self-insurance funds the company had paid to the state following the company's shuttering and firing of employees in 2018, / BLOOMBERG NEWS FILE PHOTO/LUKE SHARRETT
A WIND-DOWN company for Toys R Us-Delaware Inc. has sued the state Department of Labor and Training to recoup excess self-insurance funds the company had paid to the state following the company's shuttering and firing of employees in 2018, / BLOOMBERG NEWS FILE PHOTO/LUKE SHARRETT

PROVIDENCE – The wind-down entity of Toys R Us-Delaware Inc. has sued the R.I. Department of Labor and Training, according to federal court documents Friday.

Wayne Services Legacy Inc. is seeking to recoup at minimum $300,000 from the DLT which it said is being held as collateral to secure self-insurance workers compensation obligations. The entity said that it exists to collect and administer assets of the “Toys-Delaware Debtors.”

The company said it paid $400,000 to the department via a posted bond to the Travelers Indemnity Co. or an affiliate. The company said that the enforcement of the collection was through R.I. General Law 28-29-26.

The company argued that its exposure in Rhode Island to such claims would not exceed $78,000 – and charges that it should be able to recoup what it deems to be excess funds from the state. The company said that it had approached the DLT for return of the funds but was denied.

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The company argued that the non-release of the funds would result in “enrichment in the form of windfall to the department.”

In the suit the company said that the average per-claim payout from the funds in Rhode Island was $3,850.

“The department unreasonably contends that, pursuant to the [Rhode Island] Self-Insurance Rules and Regulations, the director cannot reduce the amount of collateral during the first 20 years after the date of termination of a workers’ compensation self-insurance program in Rhode Island,” the lawsuit said.

The company said that it was suing in federal court to “ensure the reasonably prompt return” of the collateral. The company also alleged that any delay would threaten to delay the wind-down of the company.

The company is seeking to recoup the costs, expenses and attorney’s fees related to the proceeding and “further relief” that may be determined by the court.

A DLT spokeswoman reached Friday afternoon said that “the Department of Labor and Training has not received any notice of a lawsuit regarding this matter.”

Chris Bergenheim is the PBN web editor. You may reach him at Bergenheim@PBN.com.

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