Let's just look at Johnson & Johnson, a corporation that JoeMemphis says is a great and honest company. Not really:
This is also how "vulture capitalists" like Mitt Romney operates - they use bankruptcy to avoid debt. Buy a struggling company with debt, pay yourself huge fees for running the company, sell off all profitable or valuable assets, then run the worthless shell through bankruptcy so you don't have to pay the debt you borrowed to buy the company with to start with.Johnson & Johnson is drawing criticism after using a controversial bankruptcy maneuver to block roughly 38,000 lawsuits linked to claims that its talc baby powder was contaminated with cancer-causing asbestos.
The health products giant used a quirk of Texas state law to spin off a new company called LTL, then dumped all its asbestos-related liabilities — including the avalanche of lawsuits — into the new firm.
LTL filed for bankruptcy last week in a federal court in Charlotte, N.C., a move designed to sharply limit efforts to recover damages for those who say they were harmed by J&J's baby powder.
"Johnson & Johnson doesn't have this liability anymore. They pushed all of it into the company they created just to file for bankruptcy," said Lindsey Simon, a bankruptcy expert at the University of Georgia School of Law.
As a result, Simon said, "consumers can't recover [damages] against a big solvent company. They have to recover against this smaller fictional company created [by J&J]."
This isn't unusual, it's normal.