Credit: Adobe Stock Outsize Role Bankruptcy Courts Play in Mass Tort Litigation
This article addresses the "Texas Two-Step" litigation strategy when it comes to bankruptcy and discusses whether this strategy of utilizing the Chapter 11 process to handle mass tort litigation claims is fair, effective and will survive the scrutiny of the courts.
September 17, 2023 at 12:00 PM
7 minute read
Mass-tort bankruptcy cases have been capturing headlines recently. Everyday household names have sought bankruptcy protection to deal with mass-tort litigation claims including LTL Management LLC/Johnson & Johnson (J&J), Aearo Technologies LLC/3M and others.
Large conglomerates are using the bankruptcy system as a litigation strategy to settle or otherwise deal with mass tort claims. This strategy, coined the Texas Two-Step, evolved years ago, but has become an increasingly popular albeit controversial litigation tool, causing bankruptcy courts to grapple with whether these cases should be allowed under the Bankruptcy Code. This practice is expected to reach the United States Supreme Court soon.
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