For many organizations, bankruptcy protection is just another operational and financial strategy. ...

Bankruptcy protection laws can be abused when solvent firms enter bankruptcy as a cost effective strategy. The firm may use bankruptcy protection to:
 avoid making legitimate payments,
 adjust pension plans without consolation or renegotiation with employees,
 break union agreements, and /or
 circumvent terms of contracts.
Bankruptcy laws are not intended to help firms to entirely avoid their obligations. As such, a key ethical aspect is to investigate whether all stakeholders are being treated fairly. These aspects can be addressed by asking the following questions.
 Is the firm using the bankruptcy laws in ways in which they were not intended? Are solvent firms using them as a cost-effective means to avoid honoring their legitimate liabilities?
 If bankruptcy is just another cost-effective financial stratagem, then does this encourage firms to take unnecessary risks? If the risky venture succeeds, then the firm benefits. But if the venture does not succeed, then the firms can easily move in and out of bankruptcy, with only the creditors suffering as their claims are not fully honored.