But Whitley also said he’s not bound by Kaplan’s decision in the J&J case.
Bankruptcy Court for the Western District of North Carolina didn’t rule on the merits of consolidation in denying Aldrich Pump and Murray Boiler’s motion to dismiss on April 1. But it’s verbalizing what a lot of people think: that it isn’t right.” Not Bound “I don’t think the one decision alone does it. “It reinforces the lack of confidence that a lot of us have in the propriety and it’s just one more chink in the armor,” Tatelbaum said. The North Carolina decision and others like it suggest that the Texas Two-Step strategy may not hold up in all courts, said Charles Tatelbaum, an attorney with Tripp Scott PA who specializes in business-restructuring cases. Doing so effectively would nullify the Texas Two-Step maneuver that Trane used when it created Aldrich Pump and Murray Boiler and placed them in bankruptcy. The victims are seeking “substantive consolidation,” which would merge the assets of debtors Aldrich Pump LLC and Murray Boiler LLC with those related to industrial manufacturer Trane Technologies Plc, which isn’t in bankruptcy. Court of Appeals for the Third Circuit.īut a North Carolina bankruptcy judge last week called the Texas Two-Step into question, allowing a group of asbestos victims to continue a lawsuit seeking to undermine a reverse merger in a separate bankruptcy case. New Jersey bankruptcy Judge Michael Kaplan refused to dismiss J&J talc liability spinoff LTL Management LLC’s Chapter 11 case, finding it wasn’t filed in bad faith. The spinoff is then put into bankruptcy to manage that liability without putting the assets of the original company into play. The maneuver, known as the Texas Two-Step because of its reliance on Texas corporate law, involves a company spinning off a unit and transferring its tort liability to that unit.
A corporate strategy that gained attention in a Johnson & Johnson spinoff’s bankruptcy continues to face uncertainty despite a refusal to dismiss the Chapter 11 case.
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