While it looks immoral if you don't understand the mechanics, people are simply responding to incentives around bankruptcy laws. Nobody wants to try to turn around a bankrupt company at their old salary (with their old RSU's and options now worthless). The real question is, should Chapter 11's even be allowed for corporations (as opposed to Chapter 7)? Shareholders vote for these because they know that in a Chapter 7 bankruptcy, their shares will likely be worthless because the creditors are owed more than the company's assets. So it's the creditors who are getting screwed.
If you try to research companies that successfully turned around after a Chapter 11, you will be hard pressed to find major success stories, and I tend to think the world would be better off with more creative destruction. Even the ones listed here [0] did not have a pure Chapter 11 process -- some were bailed out by the government, Apple got private investment, and in the case of Marvel, the end result might have been the same if their assets were liquidated in Chapter 7 and Disney ended up picking them up.
If you try to research companies that successfully turned around after a Chapter 11, you will be hard pressed to find major success stories, and I tend to think the world would be better off with more creative destruction. Even the ones listed here [0] did not have a pure Chapter 11 process -- some were bailed out by the government, Apple got private investment, and in the case of Marvel, the end result might have been the same if their assets were liquidated in Chapter 7 and Disney ended up picking them up.
[0] https://www.investopedia.com/articles/personal-finance/05111...