BUSTOS, BURCHETT URGE ACTION TO END EXCECUTIVE BONUSES DURING CORPORATE BANKRUPTCY

Bustos Introduced No Bonuses in Bankruptcy Act of 2019 After Hearing Concerns from Illinoisans

WASHINGTON – Yesterday, Representatives Cheri Bustos (IL-17) and Tim Burchett (TN-02) requested information from the U.S. Department of Justice regarding the $38 million worth of bonuses that Purdue Pharma is currently seeking to pay employees in bankruptcy. In a letter sent to U.S. Attorney General William Barr, Representatives Bustos and Burchett urged the Department of Justice to request more information regarding how Purdue Pharma intends to disburse bonuses during its ongoing bankruptcy case. This includes the number and amount of bonuses wished to be paid to company insiders, highly-paid employees, their annual salaries and the justification for paying these bonuses.

The information sought by Representatives Bustos and Burchett aligns with requirements of their No Bonuses in Bankruptcy Act of 2019 – which would ensure that bankrupt companies cannot pay a bonus during the bankruptcy case to employees making more than $250,000 a year. The legislation also prohibits company insiders from receiving bonuses during the bankruptcy case – including employee relatives, board members, general partners and insiders of affiliated corporations.

“I’d like to once again thank the folks in my district who wrote to me about this issue. They are absolutely right that bankrupt companies paying bonuses to highly-paid corporate executives and insiders is a problem that Congress must fix,” Congresswoman Bustos said. “Highly compensated executives should not be able to cash out during a bankruptcy after running their companies into the ground and while laid off employees struggle to find new employment. Our common-sense, bipartisan legislation will bring such fiscally irresponsible decisions to an end.”

“Executives shouldn’t profit from their poor decision making while hard-working employees search for new jobs and worry about their next paycheck,” said Congressman Burchett. “Bonus money can be used in more efficient ways, like paying employees or outstanding bills, especially when that company is seeking the government’s protection through bankruptcy. I am proud to partner with Congresswoman Bustos on legislation that ends the practice of rewarding executives despite their lackluster business management.”

The request comes as Purdue Pharma faces more than 2,600 lawsuits alleging that the company acted improperly in the marketing and sale of opioid medications that have fueled the national opioid crisis and follows reports that the company wants pay out $38 million in bonuses. Since then, Attorneys Generals in 24 states – including Illinois – have argued that Purdue Pharma should be prohibited from giving these payouts during bankruptcy.

Read the full letter HERE.

BACKGROUND

Congresswoman Bustos decided to take up the legislation this year after hearing frustrations about the issue in letters from constituents in Rock Island and Hanover, Illinois. There have been several high-profile cases where companies have been authorized to pay bonuses to executives after filing for bankruptcy. For example, in 2017, a bankruptcy court judge ruled that Toys R US could pay $16 million in bonuses to 17 top executives – at the same time the corporation closed hundreds of stores across the country and laid off thousands of workers. In the same year, the bankrupt RadioShack corporation was authorized to pay $1.4 million in bonuses to key executives, including the Chief Executive Officer (CEO) and Chief Financial Officer (CFO). Last year, Westinghouse Electric was authorized to pay out $20 million in bonuses to employees, including to their 10 most senior executives. Congresswoman Bustos’ legislation would make sure the top executives from companies could not financially reward themselves while laying off workers or closing facilities.

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