Georgia-Pacific and the Texas Two Step: Billions for Stockholders, Nothing for Asbestos Victims
Those who claim that Georgia-Pacific, a worldwide paper and building products manufacturer, caused them to suffer from asbestos-related diseases are stuck in years-long battles with the company. This is thanks to a bankruptcy technique that may let a company making billions of dollars continue operating while avoiding financial responsibility.
The Guardian reports that Koch Industries, the company that owns Georgia-Pacific, relies on this court process to stifle legal claims while lobbying in state legislatures to limit asbestos injury lawsuits. The company bought Georgia-Pacific in 2005. It faces more than 60,000 asbestos lawsuits due to claims of exposure to asbestos-containing drywall products.
Asbestos Defendant Plays the Waiting Game
It stopped paying claims in 2017, thanks to a corporate move allowed under Texas law, the Texas Two-Step. The company split off its liabilities, which are the responsibility of a new company, Bestwall, LLC. They filed for bankruptcy protection in 2017, stopping further asbestos-related legal matters. Georgia-Pacific retained all its other assets and liabilities, and functions as if nothing had happened.
The Texas Two-Step Helps Corporations, Hurts Those Injured by Asbestos
Georgia-Pacific, which also makes Dixie cups and Brawny paper towels, is profitable. Koch Industries received $2.5 billion in dividends and $5 billion in dividends since Bestwall’s creation.
Law firms and companies using this approach to shed their legal responsibilities claim this liability diversion is the best way to pay victims fairly. Plaintiffs’ attorneys complain about extensive delays in many cases where their clients are dying. It’s also a way to escape claims the company could be liable to pay but for the fancy legal footwork.
Georgia-Pacific asbestos victims will not receive anything during pending appeals, and the bankruptcy process (if the court does not dismiss it) results in a final plan to pay claimants. Last January, a court ruled against Johnson & Johnson’s attempt to limit cancer lawsuit recoveries due to its talcum powder products using the same bankruptcy approach. The plaintiffs’ attorneys are working towards the same goal in this case.
Despite the freeze in claims, lawyers and legal consultants continue their work for Bestwall, LLC/Georgia-Pacific. In December, the bankruptcy court approved paying them more than $24 million.
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