Three U.S. senators and 25 states have petitioned the U.S, Supreme Court to hear arguments on the Texas two-step: a corporate bankruptcy restructuring process that allows companies facing potentially massive liability to divide themselves into two entities—one with corporate assets and one with corporate liabilities. Opponents of the two-step contend it improperly allows corporations to avoid their liabilities, defeating the purpose of torts plaintiffs’ right to seek redress.
These concerns are simply overblown and misplaced. The Texas two-step provides a basis for equitable and efficient judicial resolutions and provides global stability that prevents high-stakes litigation shopping. It is thus an efficient means to resolve a host of claims that can number into the thousands in a host of courts throughout the country.
