The Texas Two-Step:
Testing Bankruptcy Law and Jury Rights with Adam Silverstein
What happens when a company facing billions of dollars in mass tort claims is still financially healthy—but turns to bankruptcy anyway?
In this episode, I’m joined by plaintiff lawyer Adam Silverstein of Otterbourg to talk about the Texas two-step, a restructuring strategy that can move mass tort liabilities into a separate subsidiary, put that entity into Chapter 11, and shift thousands of claims from jury trials into bankruptcy court.
We use Johnson & Johnson’s talc litigation as a jumping-off point, including its unsuccessful LTL bankruptcy filings and the question courts keep coming back to: Is the debtor actually in financial distress, or is bankruptcy being used to manage litigation? We also get into J&J’s third attempt, prepackaged bankruptcy voting, and how the Supreme Court’s Purdue decision changed the landscape for nondebtor releases.
Adam also takes us to North Carolina, where other two-step bankruptcies have kept mass tort claims—many involving asbestos—tied up for years. That leads us into a harder part of the conversation: not everyone on the plaintiffs’ side sees these cases the same way. When litigation can stretch on for a decade or more, certainty can have its own appeal.
It’s a conversation about mass torts, Chapter 11, corporate restructuring, and what happens to the right to a jury trial when bankruptcy enters the picture.
Jump in to hear Adam’s perspective on where the Texas two-step stands, why courts have pushed back, and what may come next.
I hope you enjoy the conversation! If so, give us a rating!
If you have comments, ideas, or wish to participate, please drop me a note at Editor@LitigationConferences.com.
Tom Hagy
Litigation Enthusiast and
Host of the Emerging Litigation Podcast
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It's possible it could make this man smile. But let's not get ahead of ourselves.
Silverstein has extensive experience representing claimants and claimant committees in mass tort bankruptcies. He served as co-lead bankruptcy counsel for the official tort claimant committees in two of the largest mass tort bankruptcy cases in history: LTL Management (Johnson & Johnson) and Aearo Technologies (3M).