Bankruptcies of major retail, drug, and energy companies have recently swept the nation. Corporate boards blame trade wars; employee wages, pensions and health insurance; “excessive” regulation; and the weather — among other things. But bankruptcy regulations are doing exactly what is intended — line the pockets of CEOs and stockholders at the expense of workers and the public.
Big U.S. companies are protected under Chapter 11 laws designed to let them “reorganize” their debt, receive publicly-funded bailouts, and often escape obligations to workers. These laws have been loosened in the last two decades under Democrat and Republican presidents.
But there is no relief in sight for single moms, students with enormous debt, homeowners whose mortgage interest has doubled, or anyone with huge hospital expenses or credit card balances. Most of these have to pay every dime or lose their homes and property and remain in debt forever. Chapter 7 and 13 rules that govern most individual bankruptcies protect the banks and credit card companies who own the debt.
A rogue’s gallery of offenders. Murray Energy, Purdue Pharma, Pacific Gas and Electric (PG&E) and Sears are some corporate scofflaws who have threatened or declared bankruptcy in the last year.
Back in 2015, several big mining companies failed. Peabody Energy’s bankruptcy gave multi-million-dollar bonuses to “retain” executives and dumped all its pension obligations. Another round of mining bankruptcies has followed. The newly failed companies escaped their pension, healthcare, black lung and cleanup responsibilities. Their mines were scooped up at fire sale prices.
Now, new owners, including industry giant Murray Energy, have declared they cannot make money in coal, and announced they need bankruptcy protection. CEO Robert E. Murray stated that bankruptcy was “the best position … for our long-term success.” His goal? To get out from under “legacy debt” he inherited when he gobbled up bankrupt mines. Murray is the last U.S. coal company contributing to the miner’s pension fund.
Meanwhile, mineworkers and their families die of black lung, and their communities are ravaged by dirty air and water, chronic poverty, and unemployment.
Not incidentally, Robert Murray specializes in so-called SLAPP suits (Strategic Lawsuits Against Public Participation), a favorite weapon of corporations to silence critics.
Energy giant PG&E has spent decades avoiding liability for its systemic problems of rate gouging, causing wildfires and blackouts, and providing terrible service. The biggest enabler of electrical utility-caused disaster is the deregulation of the electrical grid in the 1990’s. Put simply, deregulation allowed companies, not regulators, to determine rates and whether lines and equipment would get repaired. Of course, PG&E and others opted for executive bonuses and shareholder payouts over serving the public. Muckraking journalist Greg Palast says succinctly, “Jerry Brown, Bill Clinton and other deregulation snake-oil salesmen, and the PG&E greedster bosses, should be imprisoned for the people already burned to death.”
Think that’s bad? Energy giants’ greed meets its match in the Sackler family, owners of Purdue Pharma. For decades they pushed their addictive drug OxyContin as a harmless pain medication. They hired doctors to promote the drug, drove out competition, marketed the highest (most profitable) dosages, then polished the family name with donations.
After 2,000 lawsuits, Purdue filed for bankruptcy protection as part of an agreement to settle claims by state, local, and tribal governments. It still denied any wrongdoing in the deaths of hundreds of thousands of people.
The Sacklers announced they were giving up ownership of the company but were soon exposed for transferring to themselves at least $1 billion through Swiss and other banks. Now, Purdue proposes to market a new product designed to reverse overdoses at little or no cost, hoping to silence vociferous objections and threatened countersuits from plaintiffs.
Finally, Sears, once the country’s largest retailer, is about to settle a bankruptcy agreement that includes the outgoing CEO skimming $5.2 billion from the company to found the “new Sears,” dumping 90,000 pensioners onto the federal pension protection program, and refusing to pay millions owed to its suppliers.
Solutions are not complicated. Student, credit card and healthcare debts should be forgiven. But any company in bankruptcy should be nationalized and its assets seized to pay workers, pensioners and injury lawsuits.
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