In an ideal world, this would probably happen quite often, but on a large and complex code base, it also means throwing away the specific knowledge that might only exist in the heads of people who have already left the company, as well as throwing away the countless hours of debugging to get it working (even if "working" might mean "barely working").
From a management point of view, it means throwing away a large amount of money and then spending more money to replace the old code base, accompanied by the usual risk of whooshing deadlines and all that.
To a programmer it might be easy to see that a rewrite will save the company money in the long run, that can be difficult to sell.
