Saint goban12/16/2023 ![]() Gross testified that Saint-Gobain repeatedly misrepresented its intent in creating the subsidiary that eventually filed for bankruptcy, calling executives’ testimony and other statements “misleading” and “not truthful.” U.S. He became a key figure in the asbestos plaintiffs’ bankruptcy case when their lawyers deposed Gross last year about the planning and purpose of the Chapter 11 maneuver. The whistleblower, Amiel Gross, alleges Saint-Gobain fired him in 2020 in retaliation for sounding an internal alarm about an unrelated health hazard: alleged contamination of drinking water by Saint-Gobain. Lawyers for plaintiff-creditors in the Saint-Gobain case have seized on the testimony of a whistleblower – a company attorney who helped plan the bankruptcy. The French construction-products giant used the tactic to shield its North American business from billions of dollars in potential liability for asbestos-related cancers. Those arguments are now gaining traction in the bankruptcy case involving Saint-Gobain. They argue the subsidiaries are essentially corporate shells, with no purpose beyond aiding their parent companies in abusing the bankruptcy system to escape accountability for wrongdoing. Plaintiffs’ lawyers have called the two-step a fraud in court actions seeking dismissals or other remedies. At the conference, Gordon called the two-step process “fair to everyone,” and a superior alternative to the broken system for mass tort claims. Otherwise, they argue, plaintiffs take their chances in trial courts, with a few getting unreasonably large jury awards but many getting nothing. Gordon and all four companies he has represented said in statements to Reuters or in court filings that the two-step is legally proper and the fairest way to compensate claimants. The upshot for the parent companies: all the benefits of bankruptcy protection with none of the usual financial and reputational wreckage. bankruptcy code – converting the plaintiffs into creditors and forcing them to seek settlements in bankruptcy court. Second, have that subsidiary quickly file for protection under Chapter 11 of the U.S. And all got the suits suspended by following Gordon’s two-step playbook: First, create a subsidiary to take on liability for the cases. Each faced tens of thousands of lawsuits alleging their products caused cancer and potentially billions of dollars in liability. Gordon has executed the maneuver for four major companies since 2017: Georgia-Pacific, Saint-Gobain, Trane Technologies and Johnson & Johnson. But the two-step is no joke: Gordon’s innovation could radically reshape corporate liability law, legal scholars say, by allowing companies to easily divert any lawsuits against them into bankruptcy court – without filing for bankruptcy themselves. The two-step, he said, is “the greatest innovation in the history of bankruptcy.” The remark prompted laughter at the April bankruptcy conference in Washington. Gordon, grinning at his audience, made a bold claim about his maneuver, which he contends benefits both companies and plaintiffs. It involves splitting a company in two, dumping the legal liability into one of the entities, and then putting that new firm into bankruptcy. Reuters | Updated: 23-06-2022 20:56 IST | Created: 23-06-2022 20:56 ISTĪttorney Greg Gordon sat before a packed hotel ballroom of bankruptcy lawyers who had come to hear him hold court on his pioneering strategy for companies seeking to dodge billion-dollar lawsuits: the “Texas two-step.” The tactic has made the Jones Day partner a polarizing figure.
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