Justice Objects to Dana Exec Windfall

    [Had a couple of days that I went "dark" here]
    Well, here's a minor step that would can salute:

U.S. Opposes Bankruptcy Bonus Plan By FLOYD NORRIS The Justice Department has joined with unions and creditors of the Dana Corporation, an auto parts company in bankruptcy protection, in opposing a proposed pay system for top executives of the company.

The move sets the stage for what could become the first major test of a new provision in the bankruptcy law aimed at curbing large retention bonuses for top management.

The United States bankruptcy trustee, a Justice Department employee charged with assuring that bankruptcy laws are complied with, also raised questions about the integrity of the proposed compensation plan.

    Think of that--government steps in and says class warfare has some limits. Whew. The rest of the article is here.

 

Comments

[Steve Diamond]

This decision is important. It is some evidence of the attempt to block the aggressive use of bankruptcy to tear up companies instead of protecting them. This shift to a new approach to bankruptcy has evolved largely unseen but is now used by specialized financial groups to take control of companies, tear up their union contracts and reemerge as public companies again while paying huge bonuses to senior insiders. Modern corporate bankruptcy law emerged in the 30s as a means to preserve "going concern" value AGAINST financial creditors but has lately been turned around in favor of those creditors. For an exploration of how this has been functioning auto parts supplier Delphi see my article at http://www.dissentmagazine.org/article/?article=409

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