The Nonprofiteer isn’t smart enough to decide; but it seems to her that only one of the essential goals of bankruptcy–enabling the enterprise to continue–even applies in the sector.
The other goals–refreshing the entity’s access to credit by wiping out its old bad debts; providing supervision in allocating assets and debts by a party without personal financial interest in the results; saving something for creditors and shareholders, often at the expense of employees–are either irrelevant or inappropriate to nonprofits, which can’t get access to credit anyway, are already governed by people without personal financial interests, and have no shareholders.
That leaves only creditors, on the one hand, and employees, on the other. Bankruptcy would then be just the next in a long line of techniques for screwing nonprofit employees for the benefit of others who are seen as somehow more deserving, a perspective the Nonprofiteer regards as somewhere between nonsensical and disgraceful.
But what does she know? By hypothesis, some employees will keep some kinds of jobs in a post-bankruptcy nonprofit. Only a case-by-case analysis would reveal whether more workers would stay employed this way than through merger with a healthier compatible agency. But no one works at a nonprofit that’s been dissolved.
It’s a sign of the economic times that these are the alternatives we’re considering.