In recent years, asbestos companies have adopted a new strategy for evading liability for mesothelioma and other asbestos-related diseases: they’ve created offshoot companies to hold their asbestos liabilities, then had those companies file for bankruptcy in Texas, where the law provides significant protection from creditors. The process has come to be known as the Texas Two-Step, and it represents a significant roadblock to justice. In light of this, representatives of a mesothelioma victim harmed by CertainTeed’s asbestos-containing building products are asking the U.S. Supreme Court to decide whether profitable corporations can continue to use this approach to escape accountability.
Mesothelioma Claims Shifted to Spinoff Company
The petition to the Supreme Court was filed last month by Michael Herlihy and the estate of Peter Bergrud, who died of mesothelioma in 2019. The plaintiffs are challenging the strategy, which has put thousands of injury claims in a state of limbo for years. In this case, CertainTeed has already paid more than $2 billion between 2002 and 2020 to asbestos litigants. Facing more than 60,000 additional pending cases, the company briefly converted into a Texas company in 2019. Half an hour later, it used a Texas divisional merger to split in two, keeping its operating business and assigning its asbestos liabilities into a new entity called DBMP, which then filed for bankruptcy in North Carolina in 2020. This action halted all lawsuits by injured workers, including Herlihy and Bergrud.
The mesothelioma claimants are arguing that DBMP’s bankruptcy was filed in bad faith because CertainTeed was never in financial trouble. In February 2026, a Fourth Circuit panel denied this assertion, ruling 2-1 that an asbestos debtor doesn’t have to be insolvent to seek bankruptcy protection, but this decision is in conflict with a decision made by the Third Circuit, which rejected a bankruptcy filing from Johnson & Johnson’s LTL Management because the company faced no immediate financial distress. The petition to the Supreme Court warns that companies will now purposely file their two-step claims with the Fourth Circuit, where judges have proven far more receptive.
Mesothelioma Victims Now Await Supreme Court Decision
The question of whether the Texas Two-Step should be allowed has risen to the level of Congress, where senators have petitioned to disallow the strategy. Despite the impact of the legal question and the fact that many plaintiffs seeking justice from CertainTeed have already waited six years, mesothelioma victims and their families should expect a significant wait before they learn whether the Court will even hear the case. DBMP doesn’t have to provide a response until October 22, 2026, and extensions are frequently granted. Legal experts predict that it will be late 2026 or early 2027 before the decision is handed down.
In June of 2026, the Court declined to review a similar Texas two-step challenge involving Georgia-Pacific’s spinoff, Bestwall. Though pertaining to the same issue, the DBMP petition presents a disagreement between two federal appeals courts, raising the likelihood that the Supreme Court will get involved. The decision will help settle the question of whether financially healthy companies can continue to use bankruptcy to delay or avoid paying compensation to those affected by their asbestos-contaminated products.
If you or someone you love has been diagnosed with mesothelioma, the Patient Advocates at Mesothelioma.net are here to help. Contact us today at 1-800-692-8608 to learn more.
