Bestwall Bankruptcy Filing Draws Legal Action from Mesothelioma Victims
When Georgia-Pacific recognized the significant liabilities it faced from pending mesothelioma and asbestos lawsuits, it established Bestwall LLC and assigned it all of those liabilities, then had the subsidiary file for bankruptcy. This strategy, called the Texas Two Step, is extremely controversial. Asbestos victims with outstanding complaints against the company have filed numerous objections based on the parent company’s lack of financial distress.
Chapter 11 Bankruptcy Filing Seeks to Stop Mesothelioma Claims
The use of the Texas Two Step in the face of asbestos claims has drawn the ire of mesothelioma victims and congressional leaders alike: both have argued that financially successful companies like Georgia-Pacific should not be permitted to evade responsibility for negligently exposing and harming thousands of people to asbestos by shifting liabilities to newly formed subsidiaries.
In a brief filed on behalf of the mesothelioma and other asbestos-disease victims asserted in part, “A corporation with billions of dollars in assets, Bestwall seeks bankruptcy protection on the explicit premise that it remains willing and able to pay its current and future debts in full without difficulty.” This argument was submitted to the Fourth Circuit Court of Appeals
Supreme Court Won’t Hear Mesothelioma Victims’ Families Arguments
After the mesothelioma victims’ appeal to the Fourth Circuit failed, the group turned to the Supreme Court, asking them to weigh in on a single element of the bankruptcy strategy. The plaintiffs asked the court to decide whether the company could use the litigation shield to stop legal actions against it, but the justices of the Supreme Court declined to hear the case. The group had also asked the justices to weigh in on whether bankruptcy courts have the authority to take action that is not specifically granted to them under the bankruptcy code.
The Supreme Court’s decision comes as a disappointment to both the mesothelioma victims and bankruptcy judges themselves, who have repeatedly requested guidance from the high court on the legal and ethical questions raised by the use of the strategy.
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