The Beginning of the End of Corporate Gaming of the Bankruptcy Laws?

It will take a few more months of legal maneuvering before American finally throws in the towel and agrees to a US Airways merger. American executives and directors will no doubt have to be bought off with golden parachutes, while trade creditors such as Hewlett-Packard and Boeing will likely be brought on board with promises of future contracts. That’s how things work in the bankruptcy racket. And all of it will be negotiated behind closed doors by legions of bankruptcy lawyers whose $1,000-an-hour fees make those $250-an-hour pilots look like pikers.

For years now, Corporate America has viewed the bankruptcy court as a blunt instrument by which failed executives and directors can shift the burden of their mistakes onto shareholders, employees and suppliers. The auto industry bailout orchestrated by the Obama administration posed the first challenge to that assumption. Now the unions at American airlines have taken another step in curbing this flagrant corporate abuse and restoring the rule of law.

– “Two can play the airline bankruptcy game,” Steven Pearlstein, Washington Post, Apr. 28 (Boldface mine)

Enough said.  I think. Except for this: I’d love to see Obama mention this and explain it during the campaign, and not fear that it’s too complicated to be explained briefly. It’s not.

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