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Thread: Corporate bankruptcy

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    Corporate bankruptcy

    From an ethical perspective, is it moral for a company facing bankruptcy to pay out millions in bonuses to departing executives while declining to pay any form of severance for hourly employees?
    For what was given to everyone for the use of all, you have taken for your exclusive use. The earth belongs not to the rich, but to everyone. - Ambrose, 4th century AD

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    tWebber guacamole's Avatar
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    I once heard such an executive say that if they weren't paid thusly, then all the executives would abandon the company en masse creating an even bigger mess than bankruptcy. I suppose we could try keeping executives who run companies into the ground a bit more accountable.
    "Down in the lowlands, where the water is deep,
    Hear my cry, hear my shout,
    Save me, save me"

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    tWebber Darth Executor's Avatar
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    Quote Originally Posted by guacamole View Post
    I once heard such an executive say that if they weren't paid thusly, then all the executives would abandon the company en masse creating an even bigger mess than bankruptcy. I suppose we could try keeping executives who run companies into the ground a bit more accountable.
    Often executives come in to try and save a dying company and make sure they have solid contracts before tying their name to a sinking ship that may well be impossible to save.

    If worker severance bonuses are an issue they should simply require corporations to actually have the funds they owe their employees at all times, possibly held by a different dedicated legal entity.
    "As for my people, children are their oppressors, and women rule over them. O my people, they which lead thee cause thee to err, and destroy the way of thy paths." Isaiah 3:12

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    Troll Magnet Sparko's Avatar
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    welcome back Darth.

    I think they should set aside money for the employees.

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    See, the Thing is... Cow Poke's Avatar
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    Quote Originally Posted by Darth Executor View Post
    Often executives come in to try and save a dying company and make sure they have solid contracts before tying their name to a sinking ship that may well be impossible to save.

    If worker severance bonuses are an issue they should simply require corporations to actually have the funds they owe their employees at all times, possibly held by a different dedicated legal entity.
    In escrow.
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  6. Amen DesertBerean amen'd this post.
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    Quote Originally Posted by KingsGambit View Post
    From an ethical perspective, is it moral for a company facing bankruptcy to pay out millions in bonuses to departing executives while declining to pay any form of severance for hourly employees?
    Do the employees have anything in their employment contract that includes or references a severance package?

    And, you kinda use "ethical" and "moral" in the same.....
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    And this comes to mind

    Scripture Verse: Matthew 20

    “For the kingdom of heaven is like a master of a house who went out early in the morning to hire laborers for his vineyard. 2 After agreeing with the laborers for a denarius[a] a day, he sent them into his vineyard. 3 And going out about the third hour he saw others standing idle in the marketplace, 4 and to them he said, ‘You go into the vineyard too, and whatever is right I will give you.’ 5 So they went. Going out again about the sixth hour and the ninth hour, he did the same. 6 And about the eleventh hour he went out and found others standing. And he said to them, ‘Why do you stand here idle all day?’ 7 They said to him, ‘Because no one has hired us.’ He said to them, ‘You go into the vineyard too.’ 8 And when evening came, the owner of the vineyard said to his foreman, ‘Call the laborers and pay them their wages, beginning with the last, up to the first.’ 9 And when those hired about the eleventh hour came, each of them received a denarius. 10 Now when those hired first came, they thought they would receive more, but each of them also received a denarius. 11 And on receiving it they grumbled at the master of the house, 12 saying, ‘These last worked only one hour, and you have made them equal to us who have borne the burden of the day and the scorching heat.’ 13 But he replied to one of them, ‘Friend, I am doing you no wrong. Did you not agree with me for a denarius? 14 Take what belongs to you and go. I choose to give to this last worker as I give to you. 15 Am I not allowed to do what I choose with what belongs to me? Or do you begrudge my generosity?’[b] 16 So the last will be first, and the first last.”

    © Copyright Original Source

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    tWebber
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    If companies have to do escrows for severance pay, as a general business practice, companies would have to hire fewer people and would have a harder time staying functional. in effect, non-BK businesses would be harder to start and operate in order to be prepared for bankruptcy.

    It may be possible to regain severance pay through an appeal to the BK court. Also, late payments to executives may be called back -- which I can safely say since it is April 1.

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    Quote Originally Posted by mikewhitney View Post
    If companies have to do escrows for severance pay, as a general business practice....
    That, of course, depends on whether there was any "severance pay" stated or implied. In most employment contracts, the employee is just as free to quit without penalty as the company is to terminate them without penalty. In fact, there is much more burden on the company than the employee.
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    tWebber
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    http://theintercept.com/2019/03/25/g...severance-scam
    CHUNG WAS RECRUITED to Gymboree five years ago by her former boss at Old Navy, where she was the vice president of kids and baby clothing design. She was told that she would have the run of an entire brand, the low-price Crazy 8. “It was their only brand that was relevant,” Chung says. She took the job.

    At the time, Gymboree was under the control of Bain Capital, Mitt Romney’s old private-equity firm. The private-equity business model involves engaging in buyouts with borrowed money and putting that mountain of debt on the company it purchases, all the while extracting profits from the company through management fees. Few companies, particularly in the high-risk retail sector, can deal with such a debt burden — it makes it difficult to invest in stores, personnel, or better products.
    This article would indicate that bankruptcy was an option from the time of the original purchase of Gymboree. There could be reason to pierce the corporate veil so as to collect severance pay that was promised but not given.

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