On eve of bankruptcy, U.S. firms shower execs with bonuses – By Mike Spector, Jessica DiNapoli (Reuters) / July 17 2020
(Reuters) – Nearly a third of more than 40 large companies seeking U.S. bankruptcy protection during the coronavirus pandemic awarded bonuses to executives within a month of filing their cases, according to a Reuters analysis of securities filings and court records.
FILE PHOTO: A Neiman Marcus department store stands next to empty parking lots at the King of Prussia Mall which remains closed due to the ongoing outbreak of the coronavirus disease (COVID-19) in Upper Merion Township, Pennsylvania U.S., May 21, 2020. REUTERS/Lucas Jackson/File Photo
Under a 2005 bankruptcy law, companies are banned, with few exceptions, from paying executives retention bonuses while in bankruptcy. But the firms seized on a loophole by granting payouts before filing.
Six of the 14 companies that approved bonuses within a month of their filings cited business challenges executives faced during the pandemic in justifying the compensation.
Even more firms paid bonuses in the half-year period before their bankruptcies. Thirty-two of the 45 companies Reuters examined approved or paid bonuses within six months of filing. Nearly half authorized payouts within two months.
Continue to article: https://www.reuters.com/article/us-health-coronavirus-bankruptcy-bonuses/on-eve-of-bankruptcy-u-s-firms-shower-execs-with-bonuses-idUSKCN24I1EE
