Texas Two-Step allows Georgia-Pacific to pay out Billions to Koch Industries
In 2017 industrial giant Georgia Pacific was the first company to create a subsidiary unit to offload its asbestos litigation liability which then declared bankruptcy. The tactic is now referred to as the Texas Two-Step and is being used by more and more corporate giants to limit their losses in asbestos litigation cases while the parent companies remain highly profitable.
The controversy here is that Georgia-Pacific paid out approximately $2.5 billion in dividend payments in 2022 to its corporate conglomerate Koch Industries. 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 while raking in massive profits.
Just last week a three-judge panel in the Philadelphia Federal Appeals Court ruled that Johnson & Johnson subsidiary LTL Management cannot use bankruptcy to side step their talcum powder lawsuits citing the company’s massive assets and lack of any genuine financial distress. A promising development for plaintiffs which will assuredly be appealed by the Johnson & Johnson subsidiary.
According to Reuters, even if Johnson & Johnson settled all their pending court cases it would cost the company approximately $5.5 billion, which would still not cause the company financial distress. Johnson & Johnson currently has a market cap of $421.97 billion making them the world’s 16th most valuable company.
Georgia-Pacific's shareholder equity is currently forecast to be at $27.8 billion for 2023.
Reuters: Koch gets $2.5 billion in dividends from unit that offloaded asbestos liability
