The meaning seems obvious but could not be expressed in an exact word of English. For example, 卡纳瓦罗为了获得赔偿金，目前看起来是在摆烂。It may mean that guy tries to get his compensation to act even like a dirty man (he may resort to dirty means to this end). Am I right?
this is a slang that gets popular recently, but it doesn't from a normal source, so you can't find it in a dictionary, this is a synonym of 躺平.
In my opinion,the component 摆 in this means "behave,do,pose",烂 means bad,suck,decay.
so when you put them together, it means "behave badly, or pose a bad/causal attitude".
if I give it a brief definition, I would define it as: knowing you should do something good, but you don't do it, you indulge yourself. in most cases, this word usually is used in such context: such as that a test is imminent, but you are so lazy, you don't want to do anything, so you indulge yourself, here you can say “我不想考试，我要摆烂”
or maybe there is a thing that you have to deal with, but you don't want to do it, you know you are doing wrong, but you just dismiss it, you are indulging yourself, this is also "摆烂".
It's a slang. For me it usually means "being lazy", "give up trying", "stop putting real efforts on something". People get into this mental state usually due to some external unreasonable situations like peer pressure, terrible management system, overall pessimistic economical situation etc.
I think your understanding is close. In your context I think the sentence can be understood as, that guy was trying to get his compensation by showing a bad attitude with no willingness of cooperation and negotiation.
I can try to explain what he thoughts in detail, that guy is probably thinking:
"I don't care how you'll do it. I want my compensation. I won't be taking any step furthur to push things towards a direction that will make everyone happy. I want you to make things work for me!"
I hope this help you better understand this kind of mood and mental state.
I wrote about this in my book, The Ultimate Chinese Dictionary of Swear Words (and the e-book is free on Amazon). See the full explanation below:
Pg.118 - Misc. Colloquialisms
摆烂 bǎi làn ★★☆☆☆ Frequency ★★★★☆ Severity
Definition: (phrase) let it rot, let everything go to hell. Literal translation: ‘let rot’
More Information 摆烂 is very recent (i.e., since 2020) internet language that can be viewed as equivalent to English concepts and phrases such as, ‘fuck it’, ‘fuck it all’, ‘let it burn’, etc. Essentially, 摆烂 is a nihilistic phrase, and can be connected to the 躺平 movement.
Sample Sentences 我不在乎取悦父母，也不想为大公司工作， 更不想结婚，就摆烂吧！ Wǒ bùzàihū qǔyuè fùmǔ, yě bùxiǎng wéi dà gōngsī gōngzuò, gèng bùxiǎng jiéhūn, jiù bǎi làn ba! I don't care about pleasing my parents, and don’t want to work for a big company, nor get married. So, fuck it all!
你的男朋友太不靠谱了。他只是要摆烂。 Nǐ de nán péngyǒu tài bù kào pǔle. Tā zhǐshì yào bǎi làn. Your boyfriend is so unreliable. He prefers to be useless.
Below is the suggestion on the English equivalent and explanation of this phrase, offered by qq.com.
go to seed - 这个词的意思是说，一个人变得”越来越弱、越来越无用“，“摆烂”，就意味着一个人变得越来越”无用“。
I (northern man) believe 摆烂 is from the southern Chinese dialect.
摆 means 'show intentionally', as in 摆谱, 摆架子, 烂 is something like 烂仔(dialect), a state of 'no longer trying or working'.
It means Cannavaro stop making any efforts and just let the team lose the game to get the compensation.
As a former football fan, this example sentence is totally wrong in real life. When Cannavaro led Tianjin, he used his personal money as bonus for his team(the club did not give any bonus officially), which has drawn praise from many other club bosses and football fans.
Later, when Cannavaro was in the late stages of his Guangzhou coaching career, he lost control of the team. He didn't 摆烂, he just can't do anything to the club.
I like the interpretation in the highly voted answer - "Indulge".
It's internal of the ego's ask of "indulge" and "allow" the ego to do anything that would even suck the "supreme" - The world has too many "asks", "demands", "should", "must" to poor ego :)
It's also a strong behavior (sometimes may be from under-conscious) a fight-back against the 内卷 (competing) world.
To not fall into the feeling of having to fight with something, remind the self to balance and enjoy the world, and be gentle to every aspect of "me".