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On eve of bankruptcy, U.S. firms shower execs with bonuses

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(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.

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 authorised payouts within two months.

Eight companies, including J.C. Penney Co Inc and Hertz Global Holdings Inc, approved bonuses as few as five days before seeking bankruptcy protection. Hi-Crush Inc, a supplier of sand for oil-and-gas fracking, paid executive bonuses two days before its July 12 filing.

J.C. Penney – forced to temporarily close its 846 department stores and furlough about 78,000 of its 85,000 employees as the pandemic spread – approved nearly $10 million in payouts just before its May 15 filing. On Wednesday, the company said it would permanently close 152 stores and lay off 1,000 employees.

The company declined to comment for this story but said in an earlier statement that the bonuses aimed to retain a “talented management team” that had made progress on a turnaround before the pandemic.

The other companies declined to comment or did not respond. In filings, many said economic turmoil had rendered traditional compensation plans obsolete or that executives getting bonuses had forfeited other compensation.

Luxury retailer Neiman Marcus Group in March temporarily closed all of its 67 stores and in April furloughed more than 11,000 employees. The company paid $4 million in bonuses to Chairman and Chief Executive Geoffroy van Raemdonck in February and more than $4 million to other executives in the weeks before its May 7 bankruptcy filing, court records show. Neiman Marcus drew scrutiny this week on a plan it proposed after filing for bankruptcy to pay additional bonuses to executives. The company declined to comment.

Hertz – which recently terminated more than 14,000 workers – paid senior executives bonuses of $1.5 million days before its May 22 bankruptcy, in part to recognise the uncertainty they faced from the pandemic’s impact on travel, the company said in a filing.

Whiting Petroleum Corp bestowed $14.6 million in extra compensation to executives days before its April 1 bankruptcy. Shale pioneer Chesapeake Energy Corp awarded $25 million to executives and lower-level employees in May, about eight weeks before filing bankruptcy. Both cited fallout from the pandemic and a Saudi-Russian oil price war, which they said rendered their incentive plans ineffective.

Reuters reviewed financial disclosures and court records from 45 companies that filed for bankruptcy between March 11, the day the World Health Organization declared COVID-19 a pandemic, and July 15. Using a database provided by BankruptcyData, a division of New Generation Research Inc, Reuters reviewed companies with publicly trade stock or debt and more than $50 million in liabilities.

Such bonuses have long spurred objections that companies are enriching executives while cutting jobs, stiffing creditors and wiping out stock investors. In March, creditors sued former Toys ‘R’ Us executives and directors, accusing them of misdeeds that included paying management bonuses days before its 2017 bankruptcy. The retailer liquidated in 2018, terminating more than 31,000 people.

A lawyer for the executives and directors said the bonuses were justified, given the extra work and stress on management, and that Toys ‘R’ Us had hoped to remain in business after restructuring.

In June, congressional Democrats responded to the pandemic-induced wave of bankruptcies by introducing legislation that would strengthen creditors’ rights to claw back bonuses. The bill – the latest iteration of a proposal that has long failed to gain traction – faces slim prospects in a Republican-controlled Senate, a Democratic aide said.

Firms paying pre-bankruptcy bonuses know they would face scrutiny in court on compensation proposed after their filings, said Clifford J. White III, director of the U.S. Trustee Program, a Justice Department division charged with monitoring bankruptcy proceedings. But the trustees have no power to halt bonuses paid even days before a company’s bankruptcy filing, he said, allowing firms to “escape the transparency and court review.”

Dodging bonus restrictions

The 2005 legislation required executives and other corporate insiders to have a competing job offer in hand before receiving retention bonuses during bankruptcy, among other restrictions. That forced failing firms to devise new ways to pay the bonuses, according to some restructuring experts.

After the 2008 financial crisis, companies often proposed bonuses in bankruptcy court, casting them as incentive plans with goals executives must meet. Judges mostly approved the plans, ruling that the performance benchmarks put the compensation beyond the purview of the restrictions on retention bonuses. The plans, however, sparked objections from Justice Department monitors who called them retention bonuses in disguise, often with easy milestones.

Eventually, companies found they could avoid scrutiny altogether by approving bonuses before bankruptcy filings. Dozens of companies have approved such payouts in the last five years, said Brian Cumberland, an executive compensation expert at consulting firm Alvarez & Marsal who advises companies undergoing financial restructurings.

Companies argue the bonuses are crucial to retaining executives whose departures could torpedo their businesses, ultimately leaving less money for creditors and employees. Now, some companies are bolstering those arguments by contending that their business would not have cratered without the economic turmoil of the pandemic.

The pre-bankruptcy payouts are needed, companies say, because potential stock awards are worthless and it would be impossible for executives to meet business targets that were crafted before the economic crisis. The bonuses ensure stability in leadership that is needed to hold faltering operations together, the firms contend.

Some specialists argue the bonuses are hard to justify for executives who may have few better job options in an economic crisis.

“With double-digit unemployment, it’s a strange time to be paying out retention bonuses,” said Adam Levitin, a professor specializing in bankruptcy at Georgetown University’s law school.

Closed stores, big bonuses

J.C. Penney has not posted an annual profit since 2010 as it has struggled to grapple with the shift to online shopping and competition from discount retailers. The 118-year-old chain, at various points, employed more than 200,000 people and operated 1,600 stores, figures that have since been cut more than half.

On May 10, J.C. Penney’s board approved compensation changes that paid top executives, including CEO Jill Soltau, nearly $10 million. On May 13, Soltau received a $1.7 million long-term incentive payment and a $4.5 million retention bonus, court filings show.

The annual pay of the company’s median employee, a part-time hourly worker, was $11,482 in 2019, a company filing shows.

J.C. Penney filed for bankruptcy two days after paying Soltau’s bonuses. At a hearing the next day, a creditors’ lawyer argued the payouts were designed to thwart court review. The payouts were timed “so that they didn’t have to put it in front of you,” said the lawyer, Kristopher Hansen, addressing U.S. Bankruptcy Judge David Jones.

Jones – who is also overseeing the Whiting Petroleum, Chesapeake Energy and Neiman Marcus cases – told Reuters that such bonuses are “always a concern” in bankruptcy cases. “That said, the adversarial process demands that parties put the issue before me before I can take action,” he added, emphasising he was speaking of general dynamics applicable to any case. “A comment made in passing by a lawyer is not sufficient.”

In its statement earlier this year, J.C. Penney said the bonuses were among a series of “tough, prudent decisions” taken to safeguard the firm’s future.

Dennis Marten – a shareholder who said he once worked at a J.C. Penney store – disagrees. He has appeared at court hearings pleading for an investigation of the company’s leadership.

“Shame on her for having the gall to get that money,” he said of Soltau.

Reporting and photo: Reuters

Business

BBM brings Vaseline, Hellmann’s, BRU Coffee to Maldives market

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Bestbuy Maldives (BBM) extended their strong and decades old partnership with Unilever International, by adding to their brand portfolio – Vaseline, Hellmann’s, and BRU Coffee for the Maldivian market.

The collaboration was announced at a Business gathering held at the Manhattan Business Hotel, attended by over 300 trade partners from across Maldives.

With this partnership, BBM strengthens its retail offerings across the Maldives archipelago. Vaseline, a trusted name in skincare, and Hellmann’s, known globally for quality food products, will now be available through BBM’s distribution network.

“Vaseline is a name that generations trust for skin care. And Hellmann’s is a global icon in flavours. We’re proud to bring both to shelves across the Maldives and enrich everyday living for our customers,” said Muksith Hussain, Business Head – Retail.

In the hospitality sector, BBM introduces Bru Coffee as an addition to its HORECA (Hotel, Restaurant, Café) offerings. BRU Coffee provides a quality beverage option for hotels, resorts, and restaurants across the Maldives.

“BRU is one of the most loved coffee brands in the region. With this launch, we’re giving our hospitality partners a versatile product that delivers on both taste and reliability that can be consumed as a beverage and for the purpose of dessert preparation, something they can serve with confidence,” said Hisham Girsy, Business Head – HORECA.

The gathering served as a platform for BBM to engage with its valued trade partners and introduce these new brands to the market.

A.V.S Subrahmanyam, Chief Operating Officer at BBM, remarked: “BBM is built on relationships. This event reflects our commitment to not just introduce great products but to support, connect, and elevate our trade partners. We’re in this together, and the journey ahead is promising.”

As BBM continues to grow its portfolio and global partnerships, the focus remains clear delivering excellence, building trust, and shaping the future of trade in the Maldives.

Bestbuy Maldives (BBM) is a leading distribution company in the Maldives, connecting international brands with local businesses across retail and hospitality sectors. With a customer-focused approach and extensive distribution network, BBM continues to be a trusted partner in the Maldivian market.

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Redefining corporate retreats at Cinnamon Dhonveli Maldives

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MICE travel is undergoing a sea change—quite literally. No longer limited to traditional conference rooms and structured schedules, Meetings, Incentives, Conferences, and Events (MICE) are now about creating moments that inspire, rejuvenate, and bring teams closer together. At Cinnamon Dhonveli Maldives, the boundaries between business and leisure blur, offering a setting that transforms work into a pleasure.

Just a 20-minute speedboat ride from Malé, Cinnamon Dhonveli Maldives is the ideal destination for teams looking to escape the expected. Here, brainstorming sessions take place on powder-soft beaches, where the rhythmic waves set the pace for new ideas. Mornings might begin with yoga by the ocean, followed by strategy meetings in open-air pavilions. Afternoons invite collaborative workshops under swaying palms or team-building activities that include snorkelling, paddleboarding, or even a friendly beach volleyball match.

Dining at Cinnamon Dhonveli Maldives elevates every corporate event with fresh, sea-to-table cuisine, designed to fuel both body and mind. From curated group dinners under star-streaked skies to themed private banquets, every meal becomes an experience in itself. For those looking to celebrate milestones or reward top performers, the resort’s scenic locations offer the perfect backdrop for gala evenings or intimate cocktail gatherings.

Accommodation blends comfort with elegance, offering ocean-view suites and beachside retreats that allow participants to rest, recharge, and return with a fresh perspective. Despite the remote charm, connectivity is never an issue—seamless Wi-Fi and business-friendly amenities ensure that productivity doesn’t pause, even in paradise.

Cinnamon Dhonveli Maldives turns corporate travel into something memorable. Whether it’s a leadership retreat, a high-level conference, or an incentive escape, the resort offers a canvas for events that leave lasting impressions. Here, business goals are pursued in harmony with nature, creativity flows effortlessly, and the line between work and well-being fades.

Let your next MICE experience be more than a meeting—make it a journey worth sharing.

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Visit Maldives presents cultural, food festival to celebrate 2025

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Maldives Marketing and Public Relations Corporation (MMPRC/ Visit Maldives) has announced the ‘Maldives Culture and Food Festival’, a two-day extravaganza showcasing the Maldivian cuisine, local arts and craft, and entertainment.

The festival will take place at Central Park, Hulhumale’, on New Year’s Eve, December 31st, 2024, and continue into New Year’s Day, January 1st, 2025, offering a unique and immersive experience for locals and tourists alike.

This exciting initiative by MMPRC is a collaborative effort involving key partners such as the Ministry of Tourism (MOT), Housing Development Corporation (HDC), MyHulhumale’, Business Center Corporation (BCC), Male’ City Council, Waste Management Corporation Limited (WAMCO), the Maldives Police Service, Maldives National Defence Force (MNDF), Public Service Media (PSM), Maldives Airports Company Limited (MACL), Dhiraagu, Ooredoo, Manta Air, Maldivian, Ace Travels, and Gulf Air. It promises a dynamic programme filled with performances, activities, and food stalls. Attendees will have the opportunity to savour authentic Maldivian dishes, explore traditional arts and crafts, and witness captivating cultural performances.

On December 31st, the festivities will begin at 20:00 with doors opening to the public. A spectacular drone show will be held, depicting a tourist’s journey through the beautiful Maldives. The evening will continue with captivating cultural performances including Boduberu performances, and “Dhafi Negun”. A New Year’s Eve countdown will also take place, culminating in a dazzling fireworks display to welcome 2025.

The celebrations will continue on January 1st 2025 from 16:00 to 22:00, with the festival reopening and featuring food and arts and crafts stalls. A range of family-friendly activities will be available, including a police and fire truck showcase, a climbing wall, a bounce house, and a Transformers display. Additionally, the festival will feature energetic Boduberu performances and an exciting Roboman showcase.

“MMPRC is proud to present the first Maldives Culture and Food Festival,” said Ibrahim Shiuree, CEO and MD of MMPRC. “This event is a key initiative to celebrate the achievements of the Maldives in 2024 and to promote the diverse cultural heritage of the Maldives while providing a memorable experience for locals and visitors. We invite everyone to join us in celebrating the Maldivian spirit as we bid farewell to 2024 and welcome the new year.”

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