[disillusioned]

I mean, this is literally what an Assignment for the Benefit of Creditors (ABC) acquisition is (or an Article 9) and the specific goal of an ABC is to allow for some semblance of the company's assets to persist unencumbered by an acquirer and without creditors having any further rights to their debts, aside from what they can claim from the proceeds of the ABC.

It's an alternative to bankruptcy that allows for the continued functioning of the business in many cases, and it absolutely leaves behind an insolvent shell. (And acquirers will go through great pains to avoid incurring "successor liability.")

[vetrom]

I'm not sure you answered the question here though, why should that sort of transaction be legal? Is there a compelling public interest in allowing this sort of transaction?

[devilbunny]

It's a pretty common way for companies to go through bankruptcy. If the courts can identify a viable business inside the company, where the main problem is debt that it can't feasibly pay, they will allow it to proceed with business while cancelling the debt. Since the alternative is having the whole thing go under, without much chance of creditors being made whole, there is a benefit to society: some of the people keep their jobs.