Texas Two-Step Asbestos Bankruptcy Avoids Supreme Court Look (1)

The Supreme Court declined to weigh in on a key element of the bankruptcy strategy that some companies use to shield themselves from liability.

Justices on Monday declined to hear whether manufacturing giant Georgia-Pacific can obtain a litigation shield through the bankruptcy of Bestwall LLC, an affiliate it created to handle asbestos lawsuits. After Georgia-Pacific placed Bestwall into bankruptcy in 2017, it obtained a court order protecting itself from liability.

The litigation shield is a core benefit of the Texas Two-Step, a legal strategy in which a company creates a corporate entity, transfers liability to it and places it into ...