Stradling Bankruptcy and Financial Restructuring partner Greg Jones recently joined Legal Lens, a Debtwire podcast, for an in-depth discussion on the evolving challenges of asbestos-related bankruptcies—highlighting the recent Bestwall case and its broader implications for mass tort litigation.
In conversation with host Andy Sebe, Greg explained how asbestos liabilities are uniquely complex in bankruptcy because injuries often don’t manifest until years after exposure—sometimes long after a company has filed for Chapter 11. This reality gave rise to the use of asbestos trusts and channeling injunctions, which were first introduced in the landmark Johns-Manville case and later codified in Section 524(g) of the Bankruptcy Code. “It’s not fair to have individuals who incurred [injury] but didn’t know about it through no fault of their own be stopped from being able to share in the proceeds of a bankruptcy estate,” Greg shared.
Many companies with significant asbestos liabilities are now defunct, existing solely to administer claims. Greg also discussed how some businesses have turned to the controversial “Texas two-step” strategy—splitting into two entities to isolate liabilities from the operating business. This maneuver is at the heart of the long-running Bestwall litigation involving Georgia Pacific. “It seems astonishing that the case was filed in 2017, and it’s now eight years later… the victims haven’t gotten anything, and their families haven’t seen anything,” Greg noted. He emphasized the difficulty in justifying the bankruptcy system in these circumstances, even while acknowledging that the legal decisions in the case have been correct given the current framework.
The conversation also explored whether the asbestos trust model could or should be adapted to other mass torts, such as opioid litigation or sexual abuse cases, where injuries may surface long after exposure or trauma. Greg also pointed out the challenges smaller companies face when pulled into asbestos litigation without clear evidence of liability. In some cases, bankruptcy becomes a survival tactic due to overwhelming legal costs rather than proven wrongdoing.
Regarding the role of courts, Greg expressed concern about judges stepping too far into legislative territory. “I think once you start coming up with your own ideas as to what should go in a case based on your ideas of fairness, it chips away at the reliability of the system. But I understand why judges as humans would want to intervene—it’s really hard,” he said.
Greg concluded by advocating for potential reforms, such as procedures to first determine whether liability exists before proceeding with a full bankruptcy case. “If you can stop a bankruptcy proceeding long enough to determine whether the allegations are even valid, that may avoid unnecessary legal expense and delay. But if there is liability, then bankruptcy may still be the best way forward.”
To hear the full conversation, listen to the episode “Asbestos Mass Tort Cases and Bestwall Arguments with Greg Jones” on the Legal Lens podcast here: Asbestos Bankruptcies & The Best Wall Case
