But Johnny Williams, president and CEO of Total Assets Recovery Inc., an asset-management company in Dallas, argued that the wisdom of bankruptcy law resides in the fact that it forgives those who fail: "You have to look at each bankruptcy individually. Too often we look at the past abuses of a few and often end up really hurting the ones that are truly using the system for what it was designed to do."
That's a noble sentiment, counters Larry Weindorf, president of Anchor Recoveries Inc., a Tampa debt-collection agency, but one that's tough to share when someone else's bankruptcy ripples through your business: "We all want to feel bad for someone or a business that has had to file for bankruptcy, but how do you feel when you can't collect on an invoice and your accounts receivable are down the tubes?"
Does the law, then, unduly punish the wronged parties? David Greenfield, president of Cetacea Productions, a company in Portland, Maine, specializing in multimedia and corporate videos, thinks so: "If the investors in a business are the ones taking the risks on a new venture, why are the vendors the ones losing money?"
But Don Phillips, a pool-and-spa-industry consultant in Orange County, Calif., argues that vendors should assess the inherent risk in taking on any start-up as a customer: "Although I feel sorry for the company that gets nailed with a bankrupt customer, it is, in the final analysis, the responsibility of the supplier to weigh the loss potential against the possible gain in dealing with a corporation. All too often a company will jump at the chance to sell their products and services without due diligence."
The following readers' comments appeared in a subsequent issue of Inc.
Readers' Debate
Was CEO 'morally vacant' to ignore potential loss of life?
July's installment of Black and White--"Would You Lie to Save Your Company?"--dissected the decision-making style of the CEO of an airplane-engine-repair company. After being notified that eight airplanes his company worked on had been grounded--a situation for which his company's parts could be responsible--the CEO had to decide how much to disclose to his bankers, his employees, his investors, and his auditors. Although he weighed many factors in deciding whom and how much to tell, the CEO admitted that he never once considered the lives that could be at stake. That, he felt, was the Federal Aviation Administration's burden. "What do I know about engines?" the CEO reasoned, by way of defending his oversight. "As a businessman, I was looking at this in terms of my survival." Readers looked at the situation from a wide range of perspectives:
As far as Alex Chompff, service manager for ComputerCare Inc., in Mountain View, Calif., was concerned, it would have been "irresponsible and foolish" for the CEO to act differently: "Why should the CEO of a company, whose goal it is to make that company survive and prosper, release speculative information voluntarily that would certainly destroy his company? The CEO took the necessary legal precautions."
William Bennett, vice-president of marketing for Alliance Underwriters LLC, in Woodstock, Ga., points out that the CEO didn't make the decision in a vacuum: "Companies have boards of directors, in addition to outside professionals, to direct them in times where critical issues are at stake. If you doubt their ability to give wise counsel, you need to make some changes." But, Bennett says, "I can't imagine that a person directing a company in this business wouldn't be thinking about the impact on lives as the critical issue."
Even so the CEO's own apparent disregard of any lives potentially at stake left Tim C. Mazur, vice-president of the Council for Ethics in Economics, in Columbus, Ohio, shocked at "the business and ethical ignorance" he saw displayed: "When he reasoned that the possibility of his personal financial survival was more important than the actual survival of potentially thousands of innocent airline passengers, he proved his priorities rank 100% self-interest and 0% ethics. His conclusion that the passengers' lives are 'the FAA's burden' is shortsighted, morally vacant, and an extraordinarily strong argument against free enterprise and capitalism, given that government regulation would severely increase in a market where businesspeople are completely devoid of any responsibility for safety."
"I am surprised at the stance you took, Tim," responded Bob Ballantyne, president and CEO of Genesis Laboratory Systems and Genesis Generations, in Palisade, Colo., and Clifton, Colo., respectively. "As a person who has designed and manufactured to the Food and Drug Administration's 510 specification, I can tell you it is a little different world than the local Pizza Hut franchise. The regulators take all your options away for public safety (for good reason). You are beholden to them and their procedure. If there was a real danger to public safety, you can bet the FAA would have grounded the fleet."
"What troubled me most about the CEO," adds Larry Grimes, Gresham Professor of Humanities at Bethany College, in Bethany, W. Va., "was that he never thought outside the organization; it was as if he made no product, had no contact with consumers, lived outside society. He called in the board, the accountants, the lawyers. He didn't call in the engineers. That omission scared me."
