02.25.22

Whitehouse Responds to Ruling Upholding the Harmful Texas Two-Step Bankruptcy Maneuver

Senator is pursuing legislative solutions to this growing trend in bankruptcy law

Washington, DC – Today, Senator Sheldon Whitehouse (D-RI), Chairman of the Senate Judiciary Subcommittee on Federal Courts, Oversight, Agency Action, and Federal Rights, responded to a New Jersey judge’s ruling permitting Johnson & Johnson’s talc claims subsidiary to continue a bankruptcy process known as the “Texas Two-Step”—a maneuver used by corporations to evade tort liabilities and make it more burdensome for tort plaintiffs to recover.

“Today’s ruling greenlights a maneuver to help big corporations on solid financial footing shirk responsibility for hurting Americans. The Texas Two-Step means victims of corporate harm get bogged down in bankruptcy proceedings, while the corporation that harmed them continues business as usual. As we’ve seen in my subcommittee, that can mean victims never get their day in court.”

“The Texas Two-Step is a blot on our legal system that’s neither efficient nor fair for victims. We need to find a sensible fix.”

Earlier this month, Whitehouse led a bipartisan hearing on the Texas Two-Step and related bankruptcy maneuvers deployed by corporations to avoid responsibility for harms to the American people. The subcommittee heard wrenching testimony from a witness battling terminal mesothelioma, who has sued Johnson & Johnson for tort damages. Whitehouse signaled at the hearing that he plans to pursue legislative action to restore the bankruptcy process to its intended use.

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