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



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

(Reuters) – Approximately a third of more than 40 huge providers in search of U.S. individual bankruptcy security in the course of the coronavirus pandemic awarded bonuses to executives in just a month of submitting their situations, in accordance to a Reuters investigation of securities filings and courtroom documents.

FILE Photograph: A Neiman Marcus division retail store stands up coming to vacant parking lots at the King of Prussia Shopping mall which stays shut due to the ongoing outbreak of the coronavirus disorder (COVID-19) in Upper Merion Township, Pennsylvania U.S., Could 21, 2020. REUTERS/Lucas Jackson/File Picture

Beneath a 2005 bankruptcy regulation, businesses are banned, with several exceptions, from shelling out executives retention bonuses while in bankruptcy. But the firms seized on a loophole by granting payouts ahead of filing.

Six of the 14 corporations that approved bonuses in just a thirty day period of their filings cited enterprise challenges executives confronted in the course of the pandemic in justifying the compensation.

Even much more corporations paid out bonuses in the 50 percent-yr period of time in advance of their bankruptcies. 30-two of the 45 providers Reuters examined authorised or compensated bonuses in just 6 months of filing. Approximately fifty percent licensed payouts within two months.

8 firms, together with J.C. Penney Co Inc and Hertz International Holdings Inc, accredited bonuses as couple as 5 times right before in search of bankruptcy defense. Hello-Crush Inc, a provider of sand for oil-and-gasoline fracking, paid govt bonuses two days just before its July 12 filing.

J.C. Penney – compelled to briefly shut its 846 office merchants and furlough about 78,000 of its 85,000 workforce as the pandemic unfold – approved nearly $10 million in payouts just before its May possibly 15 submitting. On Wednesday, the firm explained it would completely close 152 retailers and lay off 1,000 workers.

The company declined to comment for this story but stated in an before statement that the bonuses aimed to retain a “talented administration team” that had produced progress on a turnaround just before the pandemic.

The other firms declined to comment or did not respond. In filings, quite a few reported economic turmoil had rendered common payment designs obsolete or that executives acquiring bonuses had forfeited other compensation.

Luxury retailer Neiman Marcus Team in March quickly closed all of its 67 shops and in April furloughed a lot more than 11,000 personnel. The corporation compensated $4 million in bonuses to Chairman and Main Government Geoffroy van Raemdonck in February and far more than $4 million to other executives in the months before its May 7 personal bankruptcy submitting, court information present. Neiman Marcus drew scrutiny this week on a approach it proposed soon after submitting for individual bankruptcy to shell out further bonuses to executives. The corporation declined to remark.

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Hertz – which a short while ago terminated additional than 14,000 employees – paid senior executives bonuses of $1.5 million times just before its May well 22 personal bankruptcy, in element to figure out the uncertainty they faced from the pandemic’s affect on travel, the organization reported in a submitting.

Whiting Petroleum Corp bestowed $14.6 million in excess payment to executives times prior to its April 1 bankruptcy. Shale pioneer Chesapeake Electricity Corp awarded $25 million to executives and decreased-degree workers in May, about 8 weeks before submitting individual bankruptcy. Both equally cited fallout from the pandemic and a Saudi-Russian oil rate war, which they explained rendered their incentive strategies ineffective.

Reuters reviewed fiscal disclosures and courtroom documents from 45 corporations that filed for bankruptcy concerning March 11, the working day the Earth Health and fitness Business declared COVID-19 a pandemic, and July 15. Making use of a databases presented by BankruptcyData, a division of New Generation Investigate Inc, Reuters reviewed firms with publicly trade stock or personal debt and much more than $50 million in liabilities.

This kind of bonuses have very long spurred objections that organizations are enriching executives whilst reducing positions, stiffing creditors and wiping out stock buyers. In March, creditors sued former Toys ‘R’ Us executives and directors, accusing them of misdeeds that incorporated paying out administration bonuses days right before its 2017 bankruptcy. The retailer liquidated in 2018, terminating additional than 31,000 folks.

A lawyer for the executives and directors stated the bonuses have been justified, specified the further function and stress on management, and that Toys ‘R’ Us experienced hoped to keep on being in small business right after restructuring.

In June, congressional Democrats responded to the pandemic-induced wave of bankruptcies by introducing laws that would reinforce creditors’ legal rights to claw again bonuses. The bill – the newest iteration of a proposal that has very long failed to obtain traction – faces slim potential clients in a Republican-controlled Senate, a Democratic aide explained.

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Firms paying pre-bankruptcy bonuses know they would confront scrutiny in court on compensation proposed immediately after their filings, said Clifford J. White III, director of the U.S. Trustee Program, a Justice Department division billed with checking bankruptcy proceedings. But the trustees have no electrical power to halt bonuses paid out even days ahead of a company’s personal bankruptcy filing, he claimed, permitting corporations to “escape the transparency and courtroom overview.”

DODGING Bonus Limitations

The 2005 laws needed executives and other corporate insiders to have a competing position present in hand right before receiving retention bonuses throughout personal bankruptcy, among other limitations. That pressured failing corporations to devise new methods to pay back the bonuses, according to some restructuring authorities.

Just after the 2008 monetary crisis, corporations usually proposed bonuses in individual bankruptcy court, casting them as incentive programs with goals executives have to fulfill. Judges mainly accepted the strategies, ruling that the general performance benchmarks place the payment further than the purview of the restrictions on retention bonuses. The programs, however, sparked objections from Justice Office screens who known as them retention bonuses in disguise, generally with straightforward milestones.

Sooner or later, firms found they could keep away from scrutiny completely by approving bonuses ahead of individual bankruptcy filings. Dozens of providers have authorized these types of payouts in the final 5 years, explained Brian Cumberland, an government compensation specialist at consulting firm Alvarez & Marsal who advises providers going through economical restructurings.

Corporations argue the bonuses are very important to retaining executives whose departures could torpedo their corporations, finally leaving significantly less money for creditors and employees. Now, some organizations are bolstering all those arguments by contending that their company would not have cratered with out the financial turmoil of the pandemic.

The pre-bankruptcy payouts are desired, providers say, mainly because possible stock awards are worthless and it would be extremely hard for executives to fulfill enterprise targets that ended up crafted in advance of the financial disaster. The bonuses guarantee balance in management that is wanted to maintain faltering functions jointly, the companies contend.

Some experts argue the bonuses are tricky to justify for executives who could have couple better work choices in an financial crisis.

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

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Shut Suppliers, Big BONUSES

J.C. Penney has not posted an once-a-year earnings considering the fact that 2010 as it has struggled to grapple with the change to on the net buying and competitiveness from lower price vendors. The 118-12 months-previous chain, at various details, used much more than 200,000 individuals and operated 1,600 merchants, figures that have considering that been slice far more than 50 %.

On Could 10, J.C. Penney’s board approved payment changes that paid out prime executives, together with CEO Jill Soltau, almost $10 million. On Might 13, Soltau gained a $1.7 million long-time period incentive payment and a $4.5 million retention bonus, court filings present.

The annual pay out of the company’s median staff, a portion-time hourly employee, was $11,482 in 2019, a organization filing displays.

J.C. Penney filed for bankruptcy two days just after paying Soltau’s bonuses. At a hearing the next working day, a creditors’ lawyer argued the payouts have been built to thwart courtroom critique. The payouts had been timed “so that they didn’t have to set it in entrance of you,” reported the lawyer, Kristopher Hansen, addressing U.S. Personal bankruptcy Decide David Jones.

Jones – who is also overseeing the Whiting Petroleum, Chesapeake Energy and Neiman Marcus scenarios – informed Reuters that such bonuses are “always a concern” in individual bankruptcy instances. “That explained, the adversarial approach demands that get-togethers place the concern in advance of me prior to I can choose motion,” he additional, emphasizing he was talking of common dynamics applicable to any case. “A comment designed in passing by a attorney is not ample.”

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In its assertion before this yr, J.C. Penney said the bonuses had been among a collection of “tough, prudent decisions” taken to safeguard the firm’s foreseeable future.

Dennis Marten – a shareholder who explained he once labored at a J.C. Penney retail outlet – disagrees. He has appeared at court docket hearings pleading for an investigation of the company’s leadership.

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

Reporting by Mike Spector and Jessica DiNapoli Editing by Brian Thevenot

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Portuguese historical films will premiere on 29 December.



Portuguese historical films will premiere on 29 December.

Method Media Bermuda will present the documentary FABRIC: Portuguese History in Bermuda on Thursday, December 29 at the Underwater Research Institute of Bermuda.

A spokesperson said: “Method Media is proud to bring Bermuda Fabric: Portugal History to Bermuda for its 5th and 6th showing at the Bermuda Underwater Observatory. In November and December 2019, Cloth: A Portuguese Story in Bermuda had four sold-out screenings. Now that Bermuda has reopened after the pandemic, it’s time to bring the film back for at least two screenings.

“There are tickets For $ 20 – sessions at 15:30 and 18:00. Both screenings will be followed by a short Q&A session.

Director and producer Milton Raboso says, “FABRIC is a definitive account of the Portuguese community in Bermuda and its 151 years of history, but it also places Bermuda, Acors and Portugal in the world history and the events that have fueled those 151 years.

“It took more than 10 years to implement FABRIC. The film was supported by the Minister of Culture, the Government of the Azores and private donors.

Bermuda Media Method [MMB] Created in 2011 by producer Milton Raposo. MMB has created content for a wide range of clients: Bermuda’s new hospital renovation, reinsurance, travel campaigns, international sports and more. MMB pays special attention to artistic, cultural and historical content.

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Maestro de Braga is the first Portuguese in the National Symphony Orchestra of Cuba.



Maestro de Braga is the first Portuguese in the National Symphony Orchestra of Cuba.

Maestro Filipe Cunha, Artistic Director of the Philharmonic Orchestra of Braga, has been invited to conduct the Cuban National Symphony Orchestra, as announced today.

According to a statement sent by O MINHO, “he will be the first Portuguese conductor to conduct this orchestra in its entire history.”

In addition to this orchestra, the maestro will also work with the Lyceo Mozarteum de la Habana Symphony Orchestra.

The concerts will take place on 4 and 12 March 2023 at the National Theater of Cuba in Havana.

In the words of the maestro, quoted in the statement, “these will be very beautiful concerts with difficult but very complex pieces” and therefore he feels “very motivated”.

From the very beginning, Rachmaninoff’s Piano Concerto No. 2 will be performed by an Italian pianist (Luigi Borzillo), whom the maestro wants to bring to Portugal later this year. In the same concert, Mendelshon’s First Symphony will be performed.

Then, at the second concert, in the company of the Mexican clarinetist Angel Zedillo, he will perform the Louis Sfora Concerto No. 2. In this concert, the maestro also conducts Tchaikovsky’s Fifth Symphony.

“This is an international recognition of my work. An invitation that I accept with humility and great responsibility. I was surprised to learn that I would be the first Portuguese member of the Cuban National Symphony Orchestra. This is a very great honor,” the maestro said in a statement.

“I take with me the name of the city of Braga and Portugal with all the responsibility that goes with it, and I hope to do a good job there, leaving a good image and putting on great concerts. These will be very special concerts because, in addition to performing pieces that I love, especially Rachmaninov and Tchaikovsky, I will be directing two wonderful soloists who are also my friends. It will be very beautiful,” concludes Filipe Cunha.

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