Bayer is desperate to put glyphosate litigation in the rear-view mirror. Just. Get. It. Over. That has the Bayer brain trust turning over every rock in the hopes of finding a golden ticket. Reportedly under one of the rocks up for consideration is the Texas two-step.
Two what?
The Texas two-step is a legal, although arguably dubious practice, of putting an end to liability associated with massive lawsuits. A company in legal distress uses the Texas law in state court to split their company in two — one company containing all its assets and the other company containing all its liabilities associated with tort claims. Then the spun off company files bankruptcy, relieving the other company of its lawsuit problems while avoiding having to submit its assets to the bankruptcy courts.
Proponents of the Texas two-step say creation of a spun-off affiliate to pay claims gives plaintiffs access to equal or greater assets in bankruptcy court as opposed to typical tort litigation.
Related on the SLP
Opponents of the two-step argue spun off affiliate companies are nothing more than shell corporations with no business operations of their own and as such are not properly Chapter 11 debtors, which under bankruptcy law requires a going concern to preserve.
Bayer has burned through at least $10 billion of the $16 billion it earmarked to defend itself in glyphosate tort cases. And it still has more than 50,000 cases pending with new cases popping up seemingly on a monthly basis. It would not be a stretch to think Bayer lawyers are bone tired and wonder if they’ll ever find the end of the tunnel.
