Kevin J. Delaney's book "Strategic Bankruptcy: How Corporations and Creditors use Chapter 11 to their Advantage" clearly illustrates the sociological ramifications of Chapter 11 bankruptcy. Delaney argues that bankruptcy has become a legitimate business tool that is often used by important players like Texaco and Continental Airlines, among a wide variety of others. Delaney notes that Chapter 11 is often used to address a variety of social issues. This interaction reveals a great deal about the complex and powerful connections that exist between law, economics, and sociology in American society. Strategic Bankruptcy chronicles the recent use of bankruptcy law as a legitimate business strategy by corporations. In the book, Delaney chronicles the cases of companies like Texaco, Johns-Manville, and Continental Airlines. He argues the Chapter 11 has been used extensively by businesses for a variety of political and organizational ends. These include defeating lawsuits or reducing the amount of compensation that the company is required to pay, restructure the social and economic sectors of the company, or defeat strong unions. Delaney argues that corporations often use Chapter 11 as a simple business tool, regardless of the number of people that are injured by the decision to invoke Chapter 11.

Delaney tells the stories of several major companies who have chosen to file Chapter 11 in recent years. Notably, he discusses the Chapter 11 filing of Johns-Manville in 1982. Johns-Manville was a major asbestos manufacturer that faced claims that exposure to its product had damaged the health of numerous people. The company faced large potential expenditures in compensation for these cases. Johns-Manville carried appropriate insurance against such an incident. However, its twenty insurance companies refused to pay claims, forcing the company to drastic measures.

As a result, Johns-Manville declared itself insolvent to avoid paying these claims.

The author also discusses the Chapter 11 filing of Continental Airlines. Continental was one of the top ten airline carriers in the United States at the time of its filing. Delaney asserts that Frank Lorenzo's Continental deliberately manipulated its balance sheet to claim a financial deficit, and file for Chapter 11 bankruptcy. The filing of bankruptcy thus forced its union to accept reductions in financial compensation for its workers.

In addition, Delaney notes the Chapter 11 filing in 1987of the oil powerhouse, Texaco. Prior to filing for bankruptcy, Texaco had faced a courtroom defeat by Pennzoil, a corporate rival. In this defeat, Texaco was required to pay Pennzoil significant damages, amounting to over $10 billion. Instead, Texaco chose to file Chapter 11 in order to avoid paying Pennzoil this money.

Delaney argues that a wide variety of organizations are now using bankruptcy as a viable business tool. The examples above note the use of Chapter 11 filing by corporations, but a wide number of other actors have recently chosen to use Chapter 11 to further their business needs. These include, but are not limited to investment bankers, commercial creditors, bond rating agencies, and auditors.

The repercussions of filing Chapter 11 were remarkably light for the companies noted in Delaney's book. Continental Airlines in particular managed to continue flying in the first week of their filing for bankruptcy. Due to good planning by the company and the cooperation of creditors, Continental even managed to offer some of the lowest fares available in the market at the time.

Certainly, the tale of Continental Airlines argues that bankruptcy does not hold the same stigma as it did decades ago. Accordingly, Delaney investigates the old stigma associated with bankruptcy, and then compares this with the modern attitude toward corporate bankruptcy. Mere decades ago, the idea of bankruptcy could terrify a manager, and had the potential to completely destroy the credibility and viability of a company. However, in the intervening years, bankruptcy has evolved into a weapon used often by some of the most powerful and influential companies in the United States.

Interestingly, the increased use of Chapter 11 by corporations...

As such, perhaps the use of bankruptcy to solve problems can be seen as a wide shift in societal norms, rather than as a simple shift in corporate ethics. Certainly, the use of bankruptcy to solve personal economic problems in many ways mirrors those of corporations. Often, individuals who file bankruptcy are not the poorest individuals, and they often make a good deal of money.
However, individuals who file bankruptcy have incurred a great deal of personal debt, and bankruptcy has become a viable alternative to free them of that debt.

In contrast, corporations that chose to file for bankruptcy are commonly financially solvent. While some corporations who file Chapter 11 often do so for financial reasons, Delaney makes it clear that bankruptcy has become a way for a corporation to solve a great number of ills. Despite the apparent differences in the reasons why individuals and corporations file for bankruptcy, one thing remains clear: in recent years, bankruptcy has become a viable alternative to end a number of ills. Further, bankruptcy has lost much of its social stigma for both individuals and corporations, and also lost many of its terrible economic consequences for corporations.

In his book, Delaney explores the reasons why a variety of key players chose to file Chapter 11. The reasons are as varied as the individual corporations, and go well beyond the traditional intent of bankruptcy as a means of last financial resort. Many of the companies that Delaney investigates have billions of dollars in assets, and choose to file bankruptcy for a wide variety of reasons other than financial.

Delaney's discussions also reveal a great deal about the connection between law, economics, and sociology. He notes that bankruptcy court is rapidly becoming a way for companies to address a wide variety of social concerns, rather than as a way to address economic problems. As such, it appears that our society is now endorsing, or at the very least allowing, financial and legal solutions for a variety of troubling social problems that commonly arise within the corporate sphere.

Delaney notes specifically that bankruptcy has been used by major players to address a variety of social concerns. These include the timing and amount of compensation awarded to individuals whose health has been severely damaged by the actions of a corporation. Further, the breaking of labor contracts that have been legally decided has been allowed in bankruptcy court. In addition, bankruptcy court has also been used to address the ethical and legal ramifications of corporate takeovers.

Ultimately, Delaney argues that current American bankruptcy laws favor corporate interests above the interests of the community and labor unions. Certainly, his thorough discussion of the cases of Johns-Manville and Continental Airlines lend considerable credence to his claims. As such, he argues that the losers in the recent increases in corporate filings of Chapter 11 are the "little guys," including workers and those who are hurt by the actions of large corporations. Thus, Chapter 11 provides many corporations with a legal means to avoid social and ethical responsibilities. In the many cases noted throughout the book, the bankruptcy court indirectly supported the actions of corporations by allowing them to file for bankruptcy and avoid their legal and social responsibilities.

Interestingly, Richard Swedberg notes that the role of law in economics has a profound sociological impact. Law maintains peace in society by settling conflicts, and the peace that ensues provides a good basis for a thriving economy. Further, law provides predictability in a society, thus advancing economic ends.

Further, Swedberg notes that the recent changes in bankruptcy law in the United States have "changed... bankruptcy legislation to make it easier to reorganize a business that has failed, as opposed to dissolve it" (Swedberg). Certainly, this fact reflects the profound importance of law in defining the economic realities of our times. Further, given that both law and economics play an important role in social concerns, it is easy to see…