Three U.S. Senators and legal representatives from 25 states have filed amicus briefs to the U.S. Supreme Court, asking them to reconsider the prevalent practise of ‘Texas Two-Step’ bankruptcies. The amicus briefs were lodged in support of a petition brought forward by a committee of claimants in the Bestwall LLC bankruptcy case.
The Bestwall bankruptcy has become notably contentious due to an injunction order which currently prevents victims of mesothelioma – a type of lung cancer commonly associated with asbestos exposure – from pursuing their asbestos lawsuits. The controversial injunction order is being called into question with the claimant committee requesting the Supreme Court to overturn it.
The ‘Texas Two-Step’ bankruptcy strategy generally allows companies facing mass-tort liabilities, such as asbestos lawsuits, to file for bankruptcy in one jurisdiction and then transfer all the liabilities to a new corporate entity in another jurisdiction. Critics argue that this practise prevents victims from pursuing their rightful claims and seek justice.
Details of the briefs filed, and the wider implications of this proposed change to bankruptcy proceedings can be found in the full report here.