After the terrorist attacks of September 11, 2001, most legacy airlines filed for bankruptcy protection as a way to cut costs drastically, with the exception of American Airlines. This article applies the Principle of Double-Effect to the act of filing for Chapter 11 bankruptcy protection for reasons of management strategy, in particular, cost-cutting. It argues that the Principle can be a useful tool for discerning the ethicality of the action, and demonstrates the usefulness by proposing three double-effect criteria that, when (...) fulfilled, argues for the ethical justifiability the action in question. (shrink)

Investment in financially distressed companies has taken place since the end of the depression. But a new breed of predatory activist investors called "vultures" has emerged in recent years. They take sizable debt positions in insolvent companies with the intention of significantly increasing the value of their investment through aggressive negotiation either in bankruptcy or in pre-bankruptcy restructurings. Predators thrive on adversarial conflict. Vulture investment is legal, but is it morally acceptable? This paper argues that the strategies and tactics of (...) vultures may be very unpleasant, but in themselves these are insufficient grounds for moral censure. (shrink)

This paper explores the American bankruptcy system -- especially the Chapter 11 code -- which since 1978 has allowed insolvent companies the opportunity to restructure and reorganise with the benefit of court protection from creditors. Particular attention is focused on asbestos companies, such as Johns--Manville, which have been among the most consistent and controversial filers for bankruptcy under Chapter 11. The history of asbestos and Chapter 11 is explored, against the backdrop of the burgeoning asbestos crisis, caused by increasing mortality (...) and litigation. Some of the business and ethical issues involved are highlighted by examining in detail a recent bankruptcy (Federal Mogul/T&N in 2001) that has implications in both Britain and America. Chapter 11 bankruptcy is evaluated, particularly in the light of the trend towards similar mechanisms of insolvency in the UK, Europe and the rest of the world. It is concluded that, certainly as regards the experience with asbestos, Chapter 11 offers an inefficient and inequitable method of rehabilitating or rescuing failing businesses. (shrink)