Aviation Safety Resources, Bankruptcy Fraud, Florida 2023
Bankruptcy Fraud
Aviation Safety Resources and its two debtor affiliates have been found guilty of Bankruptcy Fraud in Florida. On February 2, 2023, the Bankruptcy Court for the Middle District of Florida sustained the U.S. Trustee's objection and denied the debtors' Key Employee Retention Plan (KERP) motion.
According to the U.S. Trustee Program (USTP), the debtors argued that $30,000 in bonuses were designed to incentivize the companies' president to avoid leaving for other employment and to facilitate a sale of the debtors' assets. However, the USTP objected to the bonuses as a KERP, which is impermissible under the Bankruptcy Code for insiders unless the proponent can satisfy stringent standards.
The USTP argued that the bonuses were not incentivizing because they were not tied to any performance-based metrics and that the debtors had already closed on the sale of nearly all their assets three days before filing a motion to approve the bonuses.
The Bankruptcy Code restricts payments intended to induce corporate officers and other insiders to remain with the debtor through the bankruptcy. The proponent of those retention payments must prove that they are necessary because the insider has a bona fide job offer at the same or greater compensation, that the insider's services are essential to the business's survival and that the payments are within certain statutory limits.
The USTP's mission is to promote the integrity and efficiency of the bankruptcy system for the benefit of all stakeholders - debtors, creditors and the public. The USTP consists of 21 regions with 89 field offices nationwide and an Executive Office in Washington, D.C.
Aviation Safety Resources and its two debtor affiliates are currently under investigation for Bankruptcy Fraud. The case is ongoing, and no sentence or outcome has been determined yet.
Learn more about the U.S. Trustee Program at www.justice.gov/ust.
Key Facts
- State: Federal
- Category: White Collar Crime
- Source: DOJ Press Release â†â€â€
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