The phrase “Texas Two-Step,” as used in bankruptcy, is a legal expletive. Regardless of what the details of a Texas Two-Step might be, the phrase has become synonymous with:

• abusive behavior;
• bad faith conduct;
• a means for swindling creditors;
• the antithesis of “doing what’s right”;
• a tool for avoiding liability;
• etc., etc.

Describing a legal tactic as a “Texas Two-Step” is like calling that tactic a “#$&*#%R&” or “#*$&.” It’s a legal expletive that means “really, really bad.”

Here’s a dilemma:

• Should bankruptcy be available as a tool for resolving mass tort cases of all types (like it already is in asbestos contexts)?

Here’s an illustration of the dilemma:

• many tort claimants in the Johnson & Johnson case DO NOT want bankruptcy involved; but
• many tort claimants in the Purdue Pharma case were BEGGING the courts to approve the bankruptcy plan.

How do we solve this dilemma?

On June 27, 2024, the Supreme Court ruled in a 5-4 decision that a bankruptcy court does not have the statutory authority to discharge creditors’ claims against a non-debtor without the creditors’ consent (except in asbestos cases). The decision in Harrington v.

The U.S. Supreme Court’s opinion is Truck Insurance Exchange v. Kaiser Gypsum Co., Inc., Case No. 22-1079, Decided June 6, 2024.

Opinion’s Q & A

The Truck Insurance question is this:

• Whether an insurer with financial responsibility for a bankruptcy claim is a “party in interest” under § 1109(b)?

The Supreme Court’s answer is this:

On April 23, 2024, the American Bankruptcy Institute’s Subchapter V Task Force issued its Final Report.

This article is the eighth in a series summarizing and condensing the Task Force’s Final Report into “a nutshell.” The subject of this article is:

• whether the Subchapter V trustee or other party in interest should be allowed to file a plan after debtor’s removal from possession.[Fn. 1]

Recommendation

We have a direct statutory conflict:

• one statute requires an ERISA dispute to be resolved in arbitration; but
• a bankruptcy statute requires the same dispute to be resolved in bankruptcy.

Which statute should prevail? The bankruptcy statute, of course.

• That’s the conclusion of In re Yellow Corp.[Fn. 1]

Statutory Conflict

The In re Yellow Corp. case presents a direct conflict between these two federal statutes (emphases added):

No, it isn’t. We now have two cases where the Court has confirmed that insolvency practitioners do not need the consent of paid secured creditors when extending an administration under para. 78 of Schedule B1 of the Insolvency Act 1986 (the “Act”).

On April 23, 2024, the American Bankruptcy Institute’s Subchapter V Task Force issued its Final Report.

This article is the seventh in a series summarizing and condensing the Task Force’s Final Report into “a nutshell.” The subject of this article is:

• whether the $7,500,000 debt cap for Subchapter V eligibility should remain or revert to an interest-adjusted $3,024,725.

Recommendation

This author—whose practice is heavily weighted toward representation of official committees in large chapter 11 cases—has previously penned articles relating to questions surrounding the permanency of an official committee.

This question was considered in the recent case of Pindar where the judge concluded that an administration had been validly extended where the consent of one of the secured creditors (who had been paid) was not obtained.