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Failing Firms Paid $165 Million in Bonuses Ahead of Bankruptcy

Sept. 30, 2021, 3:00 PM

Bonuses handed out to executives just before their companies go bankrupt need tighter scrutiny because current laws aimed at curbing payments are being easily sidestepped, according to a government report released Thursday.

The Government Accountability Office is urging Congress to consider amending the U.S. Bankruptcy Code to include oversight of retention bonuses paid in the weeks preceding a Chapter 11 filing. The agency reviewed 7,300 bankruptcies that occurred during fiscal 2020 and found that 42 troubled companies awarded about $165 million of retention pay shortly before seeking court protection.

The U.S. Government Accountability Office headquarters in Washington, D.C.
Photographer: Ting Shen/Bloomberg

Laws intended to limit executive bonuses during bankruptcy by subjecting ...