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The Texas Two-Step: How Corporate Debtors Manipulate Chapter 11 Reorganizations To Dance Around Mass Tort Liability, Laura S. Rossi
The Texas Two-Step: How Corporate Debtors Manipulate Chapter 11 Reorganizations To Dance Around Mass Tort Liability, Laura S. Rossi
Emory Bankruptcy Developments Journal
The purpose of the bankruptcy system is to grant a “fresh start” to the honest but unfortunate debtor, while the purpose of the tort system is to make injured parties “whole” again. As a result, these systems inevitably clash when a business debtor files for bankruptcy while there are pending tort claims against it. The tension between these systems has reached a whole new level following the emergence of a new strategy deemed the “Texas Two-Step.”
A Texas statute leaves open a loophole for otherwise solvent companies to dodge mass tort liabilities and protect their assets, leaving injured plaintiffs with …