The Aldrich Pump Texas Two-Step bankruptcy may have survived dismissal at the bankruptcy court level, but now the asbestos claimants have appealed to the Fourth Circuit following Judge Whitley's approval of their motion for direct appeal.1
In our original article, we prefaced that Johnson & Johnson (“J&J”) would likely utilize the Texas Two Step to attempt to resolve its tort liabilities related to talc powder.1 On October 12, 2021, J&J did just that. The company used Texas’s divisive merger statute to spinoff the talc liabilities into a new entity, LTL Management, LLC (“LTL”).
Sophisticated real estate lenders spend significant amounts of time and energy attempting to insulate themselves from potential bankruptcy filings by their borrowers. A primary reason, which many an experienced real estate lender has found out the hard way, is the risk that a debtor in bankruptcy may “cram down” a plan of reorganization over its lender’s objection. Under a typical cramdown plan, a debtor may stretch out payments to its secured creditor for several years and attempt to replace its negotiated interest rate with a new, below- market rate of interest.