Georgia Pacific, owned by Koch Industries, is using Texas law to delay
justice for victims and their families who have been harmed by the company’s
practices. Georgia-Pacific faces thousands of lawsuits from former employees
and customers who developed mesothelioma and other asbestos-related diseases
from their products. In 2017 Georgia Pacific was the first company to
create a subsidiary unit in Texas to offload its asbestos litigation liability
which then promptly declared bankruptcy. The tactic is referred to as the
Texas Two-Step and allows companies and their shareholders to remain highly profitable
while limiting their losses in asbestos litigation cases.
In a bipartisan move, Senators Dick Durbin (D-IL), Sheldon Whitehouse (D-RI),
and Josh Hawley (R-MO) have called on the U.S. Supreme Court to reject
the controversial bankruptcy maneuver by Georgia-Pacific. The senators,
in an amicus brief filed with the Supreme Court, asserted that this legal
scheme undermines the integrity of the bankruptcy system and denies justice
to those harmed by the company's asbestos products. They urged the
court to prevent solvent companies from misusing the bankruptcy code to
escape accountability.
“The bankruptcy system was not designed to provide solvent non-debtors
with the option to simply decline to be held liable for alleged wrongdoing,
but that is precisely what the Fourth Circuit’s decision countenances.
That was not what Congress intended, and it is not a result that this
Court should permit.”
In the meantime, Georgia Pacific’s attorneys and legal consultants
are being paid millions of dollars to defend Georgia Pacific’s owners.
The billionaire Koch brothers are also major donors to the American Legislative
Exchange Council (ALEC), which has advocated these bills in at least six states.
The Texas Two-Step has been widely criticized by both legal experts and
plaintiffs’ lawyers as an intentional misuse of the bankruptcy process.
Even Steven Wolens, the legislator who originally wrote the Texas Two-Step
bill back in 1989 said the law never would have passed had they known
“the provisions could be dubiously interpreted for entities to avoid
known liability such as those causing severe and permanent injury or death.”
The Texas Two-Step is a blatant misuse of bankruptcy proceedings and allows
these companies to halt court proceedings and delay justice for asbestos
cancer plaintiffs.
Families condemn Koch brothers over ploy to avoid asbestos compensation
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Durbin, Whitehouse, Hawley Call on Supreme Court to Reject Georga-Pacific’s
Bankruptcy Maneuver
U.S. Senate Committee on the Judiciary