Listen to this articleA bipartisan group of 25 attorneys general, including New Jersey’s Matthew Platkin, is urging the United States Supreme Court to stop well-off companies from using bankrupt shell companies to resolve lawsuits.
In a Jan. 22 amicus brief, the AGs asks for the reversal of a June 2023 ruling from the 4th U.S. Circuit Court of Appeals that allowed pulp-and-paper maker Georgia-Pacific to avoid litigating tens of thousands of asbestos lawsuits while the company’s subsidiary, Bestwall, remains in bankruptcy.
The 2-1 decision upheld a key element of a controversial legal tactic known as the Texas two-step, in which a corporation spins off liabilities into a newly created subsidiary and then files that unit for bankruptcy.
Georgia-Pacific, one of the world’s largest manufacturing firms, pioneered the strategy in 2017, which paused 64,000 lawsuits claiming the company’s plaster construction products contained cancer-causing asbestos.
In the brief, the AGs contend that Georgia-Pacific is abusing the U.S. bankruptcy system, using it to shield assets from people who have been harmed by preventing lawsuits from moving forward without subjecting the entire company to bankruptcy.
“Wealthy companies that engage in wrongdoing should not be able to get off the hook by cheating the