As more and more asbestos companies attempt to evade mesothelioma liabilities by pursuing a controversial bankruptcy strategy, victims’ groups are asking the courts to block the actions. The latest case involves Georgia-Pacific unit Bestwall.
Texas Two-Step Strategy in Mesothelioma Claims Called “Grotesquely Inequitable”
The bankruptcy strategy, which Johnson & Johnson is attempting to use to evade ovarian cancer and mesothelioma claimants, is widely known as a Texas two-step. Solvent companies split themselves into two entities using Texas corporate law, then one entity takes on all liabilities and then files for bankruptcy, shielding the parent company’s valuable assets from creditors and allowing it to continue operating as a separate, solvent entity. Critics decry the approach as an abuse of the intent of bankruptcy law and unfair to victims.
In the case involving Georgia-Pacific and Bestwall, the official committee of asbestos personal injury claimants representing victims who blame Trane Technologies’ subsidiaries for their mesothelioma filed an amicus brief asking the Fourth Circuit to reject Bestwall’s attempt to seek bankruptcy protection, pointing to the fact that the company is not in financial distress. As part of its pleading, the group asserted, “It is, at bottom, grotesquely inequitable, disenfranchising to sick and dying asbestos victims, and plainly at odds with the fundamental tenets of bankruptcy.”
Amici Brief Filed in Support of Georgia-Pacific Mesothelioma Victims
In filing the amicus brief, the Aldrich committee confessed that its goal was to both support Bestwall’s mesothelioma victims and to counter the efforts being put forth by Trane in its own situation. Both Trane and Georgia-Pacific are highly profitable companies that established successors that funneled assets into the parent company and liabilities into the new company, then put the new company into bankruptcy. The committee said that this conflicts with the intent of bankruptcy law and its requirement that debtors “bear the burdens of bankruptcy in order to enjoy its benefits.”
Mesothelioma victims are watching the Fourth Circuit closely for its decision in this case, while in Congress, senators are working to pass a bill that would allow courts to dismiss these types of bankruptcy filings.
If you or someone you love has been diagnosed with malignant mesothelioma, the Patient Advocates at Mesothelioma.net are here to help. Contact us today at 1-800-692-8608 to learn more.
