Failing Firms Paid $165 Million in Bonuses Ahead of Bankruptcy

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 ...