Why not and how would you stop? It’s no different than a company issuing bonds to buy back its own equity.
I agree that it’s contributing to the enshitification of many end consumer industries, but I’m not sure what such a “ban” would look like it practice.
And yes, people will try to wiggle around it. That's what regulatory agencies are for. Yeah, they don't 100% work. Believe me, you're unlikely to out-cynic me.
It should still be illegal.
Which was illegal until 1982 and could be made illegal again.
That being said, it seems criminal to take an enormous management fee while sending a company into bankruptcy.
Essentially, that means some amount of corporate risk is leveraged upon the principal investors.
This is common practice in the EU for so-called "club deals".