Although the coronavirus pandemic has dealt a massive blow to several American firms, some of these enterprises awarded bonuses to their executives within a month of filing their cases.
This was based on a Reuters analysis of securities filings and court records.
A 2005 bankruptcy law in the US bans companies, with few exceptions, from paying executives retention bonuses while in bankruptcy.
The firms, however, took advantage of a loophole by granting payouts before filing bankruptcy.
Six approved bonuses a month prior to bankruptcy filings.
These American firms cited business challenges their executives faced during the coronavirus pandemic to justify the compensations.
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.