Mesothelioma victims and their families have gained powerful allies in their quest for justice from CertainTeed Corporation, as attorneys general from 20 states and the District of Columbia have asked the U.S. Supreme Court to review the controversial bankruptcy strategy known as the “Texas Two-Step.” The group filed a brief in support of a petition from asbestos claimants who are challenging a Fourth Circuit ruling in the bankruptcy of a CertainTeed spinoff.
Mesothelioma Claims Caught in a Corporate Maneuver
Mesothelioma and other asbestos injury claims have been at the center of use of the Texas Two-Step. The tactic uses a unique feature of Texas law in which a company is split in two; one new entity keeps the operating assets, while the other is handed the parent’s mass tort liabilities along with token assets. That entity then relocates to a friendly venue and files for bankruptcy related to the liabilities it has been assigned.
Mesothelioma victims with claims against CertainTeed have watched this strategy being used since 2020, when DBMP filed for bankruptcy in the Western District of North Carolina, citing more than 60,000 pending asbestos claims. The court extended a litigation stay to CertainTeed itself; this froze claims against both companies. It is now seven years later, and no plan has been confirmed. The attorneys general say that meaningful progress is unlikely before 2028.
Mesothelioma Justice and State Sovereignty
In February 2026, the mesothelioma claimants lost a key round in the battle: the Fourth Circuit panel ruled 2-1 that a debtor handling asbestos liabilities does not have to be insolvent. The attorneys general warn that this decision created a circuit split and could potentially make the Fourth Circuit the venue of choice nationwide, since a company based anywhere can form a Texas affiliate, domicile it in North Carolina, and file for bankruptcy there. They also argue that these bankruptcy injunctions block them from enforcing their own laws in their own courts. They call this a serious federal intrusion on state power that, under the reasoning offered by the court, requires no showing of financial distress from the company filing for relief.
Mesothelioma Victims Await a Decision from the Court
At the heart of the petition is a claim filed by asbestos exposure victim Michael Herlihy and the estate of Peter Bergrud, who died of mesothelioma in 2019. The asbestos company waived its right to respond, while law professors, claimant groups, and victims’ rights advocates have filed briefs in support. Though previous petitions challenging the use of the Two-Step strategy have been turned away, the states’ attorneys general think this case may finally lead to financial justice for the victims.
If you or someone you love has been diagnosed with mesothelioma, the use of the Texas Two-Step bankruptcy strategy is a significant source of concern. For information on this and other areas of interest, contact the Patient Advocates at Mesothelioma.net at 1-800-692-8608.
