Although I hope to spend most of May talking about “Contract (as) Social Responsibility,” today’s news that Cambridge Analytica is going into bankruptcy (and the English counterpart) reminds me that an important, severely undertheorized question about corporate bankruptcy is whether, or to what extent, questions of morality and ethics matter in this context?
We know that Congress takes the morality of consumer debtors seriously. That, Congress said, was why they amended the Bankruptcy Code in 2005 to “get tough” on consumers who wanted to walk away from their debts. But with the Weinstein Companies and (earlier) many Catholic dioceses viewing Chapter 11 as a way to convert sins of the flesh to sins of the balance sheet, it is (again) worth asking: should Chapter 11 be used to cash out (almost) all social problems?
The answers are not easy, and I don’t pretend to have them, but our nearly single-minded focus on the financial, rather than the ethical, aspects of corporate reorganization is, itself, interesting, especially given the very different treatment accorded consumers. A woman who ran up unmanageable medical bills for therapy following sexual assault by Harvey would find it much harder to use bankruptcy to escape those liabilities than would the Weinstein Company for its respondeat superior debt for the underlying misconduct.
In what world is that the right normative answer: the corporate perpetrator can walk away, but the victim can’t? The answer, it would appear, is “ours.”