Senate Judiciary Subcommittee Hearing, held in February 2022, Takes Aim at “Texas Two-Step” Strategy to Shift Liabilities in Bankruptcy
American Bankruptcy Institute Reports that US Senate Judiciary Subcommittee Hearing, held in February 2022, Takes Aim at “Texas Two-Step” Strategy to Shift Liabilities in Bankruptcy: The Senate Judiciary Subcommittee on Federal Courts, Oversight, Agency Action and Federal Rights held a hearing last week titled, “Abusing Chapter 11: Corporate Efforts to Side-Step Accountability Through Bankruptcy.” The “abuse” being discussed in corporations, setting up a new corporation, putting product liability claims into the new corporation, and then having the new corporation file bankruptcy, to try to use bankruptcy to stay product liability litigation (like the J& J talc cancer litigation) and to pay pennies on the dollar to the victims of the product liability suits, who are the plaintiffs suing for product liability. Witnesses testifying at the hearing included Hon. Judith K. Fitzgerald of Tucker Arensberg, P.C. (Pittsburgh), Prof. David Skeel of the University of Pennsylvania Law School, Kimberly Ann Naranjo of Sandy, Utah, Paul H. Zumbro of Cravath, Swaine & Moore LLP (New York) and Kevin C. Maclay of Caplin & Drysdale (Washington, D.C.).