Sorry, that sounded like a left rant. What I meant is 'isn't that outside the law?' The law says debts get paid, then shareholders can split what's left. I believe bankruptcy court is supposed to handle what debts go first. But it shouldn't theoretically make any difference to shareholders what debts go first.

Obviously the trick is to make sure your friends (the employees) get paid first by settling that debt before declaring. I can see how that might be legally troublesome. But it's the vendors, lenders, etc. that should be complaining, not shareholders.