[FireBeyond]

Matt Levine's spin on this is horribly pro-corporate.

The Texas Two-Step isn't a concept borne from bankruptcy courts.

Would that it were so.

You talk about charitability, but here's a question for Matt, you and others:

"Is this strategy called the Texas Two-Step because:

1) it assists claimants and plaintiffs (your adversaries) to bond together and present one solid unified case against you, or...

2) because it assists you to elegantly dance around your liabilities?"

[somenits]

You know you've lost the argument when your only response to actual facts and analysis is "yeah but what does this name sound like".

[FireBeyond]

Alright then, here:

The Texas two-step allows solvent companies to shield their assets from litigants using protections that are normally reserved for bankrupt companies. The goal of a Texas two-step is for the parent company to gain a third-party release of all liabilities it assigned to its spinoff, thus preventing litigants from pursuing those claims against the parent.

And yet here we have multiple people trying to spin things as "Oh, J&J just want what is fair for the litigants!"

Fun fact: the majority of large corporations who utilize the Texas Two Step somehow manage to avoid paying out anything more than a token sum, either through the "new" entity that holds the liabilities, or the "old" entity which promised it'd fully fund the liability holding entity.

Georgia Pacific did this. Pledged $1B, ended up funding $175M. The entity went bankrupt three months later with 62,000 claims fighting over those scraps for mesothelioma (i.e. an average claimant getting less than $3,000 - before legal costs).

Saint-Gobain did the same thing. More building products liabilities. Less than $100M in assets and no operations to fund more than 6,000 asbestos claims per year.

> Gross testified that Saint-Gobain repeatedly misrepresented its intent in creating the subsidiary that eventually filed for bankruptcy, calling executives’ testimony and other statements “misleading” and “not truthful.” U.S. Bankruptcy Judge Craig Whitley followed Gross’s testimony last August with factual findings that included his own blistering critique of the executives’ statements as “contrary to the evidence,” saying the company’s story “strains credibility.”

Trane Technologies. Same deal.

And yet you and Matt talk about how the whole concept is "designed to be more fair for the claimants".

"Facts and analysis" in the three companies who have done this before J&J would disagree with you. Strongly.

[somenits]

Can you find a source saying that Georgia Pacific or any other company was able to use this process to shield the parent company from liability? I’m not finding anything to that effect. Everything I see complains about them using the process to improperly consolidate the cases.

>Georgia Pacific did this. Pledged $1B, ended up funding $175M. The entity went bankrupt three months later with 62,000 claims fighting over those scraps for mesothelioma (i.e. an average claimant getting less than $3,000 - before legal costs).

A source would be helpful here too. Is it because the judge ultimately only found them liable for a total of $175M? Or did the judge find them liable for more but was only able to find $175M in actual money to pay out with?