Chapter 11 (bankruptcy) should be as transparent as possible. The whole idea behind bankruptcy for companies is to attempt to “reorganize” their assets and come up with a plan to pay back all or most of their debts. Yet, it appears that some corporations are getting away with not disclosing their “insider payouts.”
However nice it would be to shake a finger at these companies, one must realize that this is a much more complicated issue. When talking about salaries and bonuses, privacy is a legitimate concern. How much money someone makes is entirely their business, which means that this subject much be approached with some sensitivity.
While the salaries of CEOs all across the nation are no more than a Google search away, these reports are above all internal bonuses of a firm and thus have the potential to expose many workers (and more importantly their pocketbooks) to the public eye. In fact, many of the companies who were successful in going through Chapter 11 without disclosing pay information cited privacy or personal employee concerns as their reason for not providing the information.
As far as I can tell, the issue over reporting these figures can best be understood in two categories: ethics and law. In terms of ethics, many different questions arise. Primarily, it seems pretty unethical that a corporation could take money from the government and file for bankruptcy, all while laying off lower-level employees and giving undisclosed bonuses to the higher-ups.
It also seems a little odd (maybe even unethical) that when seeking the assistance of the government on finances, not all financial matters are on the table. But on the other hand, one must remember that these are in fact individuals who are getting paid for their job. While it is true that these businesses are failing, it would definitely be a stretch to say that all the “big-wigs” are responsible and thus deserve their earnings exposed.
These reports contain large amounts of personal information, and that should not be forgotten. While I do question the truth behind a fraction of companies being less than transparent, I do recognize that personal liberties are very important.
This takes us to the law. The legal code for Chapter 11 makes no specific requirements for insider pay. In charge of overseeing most bankruptcy courts is the U.S. Trustee Program, which is housed in the Department of Justice. Because the federal laws concerning bankruptcy have not been particularly specific, the Trustee Program really has its hands tied when cases use different methods of reporting their pay. To me, this signals an obvious flaw that should be fixed. Transparency is the clear goal, and I believe a solution can be found that balances the ethical and legal questions.
In terms of the law for the courts, I believe it should be fairly cut and dry. On all official court documents and forms, all names and payouts should be listed. The fact of the matter is that if a company is in Chapter 11 proceedings, they are trying to figure out their debts to the creditors, and the court cannot mediate a solution without all the information. The complexity of bailouts also seems to suggest that the government should be allowed this information seeing that their money is going directly into the system.
However, when and if the information is cleared and released to the public, the names should either be redacted or replaced with a numbering system. This insures that the facts are still getting out to the public (who in the cases of bailouts are in effect paying for the company), but without letting free personal information. This conclusion may not be satisfying enough for many, yet it is really a simple concept. The amount of money you bring should only be relevant to you and the government, any further disclosure must be on an individual basis.