Dr Jeff Cornwall

The new bankruptcy law does not just have an impact on individuals, but also changes the rules for businesses seeking bankruptcy protection. It seems that individuals weren’t the only ones trying to avoid the consequences of their actions. From the Tennessean:
“Businesses seeking to restructure their operations under Chapter 11 bankruptcy protection will face stiffer restrictions and limitations on their conduct. Among the more notable are tough limits on the retention and severance packages paid to the executives of companies who have filed for bankruptcy protection.”
While creditors were left wondering what if anything they could expect in payments, the executives of the bankrupt business were getting extra compensation to remain with the company. Too bad their own sense of responsibility is not enough for them to stay and help get the company through the mess they may have helped to create. It seems a bonus is in order for such actions.
There are times when bankruptcy is the only viable choice for a company. As we saw with in the aftermath of 9-11, for example, not all bankruptcies are predictable or controllable events. But many are, and the easier it is for managers and business owners to duck their obligations the more willing they may be to take make less than prudent decisions.
The current laws are structured to “provide protection” for business from their creditors. Now we have a little more protection for the creditors, who most often also are small businesses trying to stay afloat.