According to Reuters, a large number of the big companies that sought out bankruptcy protection awarded millions of dollars in bonuses to their executives within months before filing. Their reporting shows that a number of companies, including J.C. Penney and Hertz, approved bonuses “as few as five days before seeking bankruptcy protection.” This may be due to a 2005 bankruptcy law that prohibits companies from “paying executives retention bonuses while in bankruptcy.” This prepayment looks like exploiting a loophole. Three top executives, including chief financial officer Bill Wafford, chief merchant officer Michelle Wlazlo and chief human resources officer Brynn Evanson each received a $1 million payout. Despite the challenging times ahead, the company gave around $3 million in retention bonuses to its three top executives before the bankruptcy was announced. The chief financial officer received $795,000 and three other C-level executives were awarded a total $918,000.

Source: Forbes July 21, 2020 15:56 UTC