8 ms·

Matt Levine had a more charitable reading of the Texas Two-Step for J&J: https://www.bloomberg.com/opinion/articles/2023-01-31/matt-levine-johnson-johnson-s-jn

by akgoel 3y ago

Matt Levine had a more charitable reading of the Texas Two-Step for J&J: https://www.bloomberg.com/opinion/articles/2023-01-31/matt-levine-johnson-johnson-s-jnj-bankruptcy-didn-t-work https://www.bloomberg.com/opinion/articles/2023-01-31/matt-l... The idea here was that a bankruptcy judge could more fairly distribute $61.5 billion dollars among claimants than having them sue J&J one at a time and getting uneven awards and costing everyone more lawyer hours.

akira2501 3y ago
Is a class action somehow impossible if they don't declare bankruptcy? Or they can't distribute money as easily as in a class action? The mechanics of this don't sound so absolutely necessary. Further, if your company produces products that kill or injure people, then why should we show any interest in maintaining that companies existence with odd legal hacks like this? Shouldn't they be disbanded, their assets sold, and new businesses allowed to exist in that space? What are we, in total, as a society, gaining by allowing this?
- jachee 3y ago
  Preserved Shareholder Value, and another middle finger from the Invisible Hand.
- nl 3y ago
  > Is a class action somehow impossible if they don't declare bankruptcy? Or they can't distribute money as easily as in a class action? The issue is that there might be multiple actions, and compensation might be used up byt the first one (eg, if the company was sent into bankruptcy by the first class action, then subsequent cases would be useless). This is a pretty reasonable argument IMHO. > Further, if your company produces products that kill or injure people, then why should we show any interest in maintaining that companies existence with odd legal hacks like this? This seems fairly debatable. J&J produces a lot of things that aren't talc, and it isn't like they are a cigarette company that knew the health risks. The risks from talc weren't known are are still debated, and it is a thing that has been used for thousands of years without known issues. Separately there's a good argument that keeping the company alive is better for those affected because it can fun ongoing liabilities.
  - deleted 3y ago
    [deleted]
  - dumpsterdiver 3y ago
    > Further, if your company produces products that kill or injure people, then why should we show any interest in maintaining that companies existence with odd legal hacks like this? > This seems fairly debatable. To be fair, we might not have some of the drugs many of us are prescribed to us if we just cancelled every company that ever hurt anyone with experimental drugs.
    - themitigating 3y ago
      Your use of "cancelled" seems to be an attempt to imply their actions are similar to a comedian using the N word. People died and they knew their product was dangerous. That's akin to murder.
      - dumpsterdiver 3y ago
        > Your use of "cancelled" seems to be an attempt to imply their actions are similar to a comedian using the N word. No, those are your words. The discussion I was participating in was talking about medication, not race warfare. My statement was also generalized, but you apparently applied it to a specific scenario (which I am unfamiliar with) that fits your narrative.
    - autoexec 3y ago
      J&J wasn't accidentally hurting people with experimental drugs. They had full knowledge that they were poisoning people, and they actively hid that from the people they were killing, because J&J wanted more of their victim's money before they died, and a continuous supply of new victims to take the place of the old ones.
    - ClumsyPilot 3y ago
      > cancelled every company that ever hurt anyone with experimental drugs. "This baby powder is an experimental drug and may have unknown and lethal side effects" - did it say this on the packaging? If it did, fair play. Some people would be happy to try experimental and dangerous cure for cancer. But somehow I have a suspicion that the potential market share for experimental and dangerous baby powder is about 0%.
littlestymaar 3y ago
But then it's J&J as a whole that should go bankrupt, no a shell company designed for damage-control purposes…
- scott_w 3y ago
  That’s all well and good until you discover that you were affected by something else they did but you can’t sue them any more because they went bust servicing the talc powder claims.
  - littlestymaar 3y ago
    I know some of you love to be contrarians beyond reason, but come on, I'm sure you realize the insanity of your argument above…
  - c0nducktr 3y ago
    Just because there are more people who might need to sue the company isn't a reason to allow it to continue to operate. This is just 'too big to fail' but for different (and now theoretical) reasons. Maybe the solution is to nationalize J&J. "You can't bankrupt my company because someone might need to sue me later" is absurd reasoning.
    - scott_w 3y ago
      And what good will bankrupting J&J at the first lawsuit do for society?
      - orthecreedence 3y ago
        "What good will it do society to punish people who do heinous things to others?" It acts as a great deterrent to keep other corporate stooges from entering into high-risk activities. In many cases I advocate for "restorative justice" as opposed to punishment, but in the case of faceless corporations we can crash their value to 0 and call it even. We have a system of private ownership where the owners get to reap the rewards of others' labor, but when they do something wrong they pull the "but think of the employees" bullshit. No. Full ownership, full liability.
FireBeyond 3y ago
Matt Levine's spin on this is horribly pro-corporate. The Texas Two-Step isn't a concept borne from bankruptcy courts. Would that it were so. You talk about charitability, but here's a question for Matt, you and others: "Is this strategy called the Texas Two-Step because: 1) it assists claimants and plaintiffs (your adversaries) to bond together and present one solid unified case against you, or... 2) because it assists you to elegantly dance around your liabilities?"
- somenits 3y ago
  You know you've lost the argument when your only response to actual facts and analysis is "yeah but what does this name sound like".
  - FireBeyond 3y ago
    Alright then, here: The Texas two-step allows solvent companies to shield their assets from litigants using protections that are normally reserved for bankrupt companies. The goal of a Texas two-step is for the parent company to gain a third-party release of all liabilities it assigned to its spinoff, thus preventing litigants from pursuing those claims against the parent. And yet here we have multiple people trying to spin things as "Oh, J&J just want what is fair for the litigants!" Fun fact: the majority of large corporations who utilize the Texas Two Step somehow manage to avoid paying out anything more than a token sum, either through the "new" entity that holds the liabilities, or the "old" entity which promised it'd fully fund the liability holding entity. Georgia Pacific did this. Pledged $1B, ended up funding $175M. The entity went bankrupt three months later with 62,000 claims fighting over those scraps for mesothelioma (i.e. an average claimant getting less than $3,000 - before legal costs). Saint-Gobain did the same thing. More building products liabilities. Less than $100M in assets and no operations to fund more than 6,000 asbestos claims per year. > 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. Bankruptcy Judge Craig Whitley followed Gross’s testimony last August with factual findings that included his own blistering critique of the executives’ statements as “contrary to the evidence,” saying the company’s story “strains credibility.” Trane Technologies. Same deal. And yet you and Matt talk about how the whole concept is "designed to be more fair for the claimants". "Facts and analysis" in the three companies who have done this before J&J would disagree with you. Strongly.

by akgoel 3y ago

akira2501 3y ago

Is a class action somehow impossible if they don't declare bankruptcy? Or they can't distribute money as easily as in a class action? The mechanics of this don't sound so absolutely necessary. Further, if your company produces products that kill or injure people, then why should we show any interest in maintaining that companies existence with odd legal hacks like this? Shouldn't they be disbanded, their assets sold, and new businesses allowed to exist in that space? What are we, in total, as a society, gaining by allowing this?

jachee 3y ago
Preserved Shareholder Value, and another middle finger from the Invisible Hand.
nl 3y ago
> Is a class action somehow impossible if they don't declare bankruptcy? Or they can't distribute money as easily as in a class action? The issue is that there might be multiple actions, and compensation might be used up byt the first one (eg, if the company was sent into bankruptcy by the first class action, then subsequent cases would be useless). This is a pretty reasonable argument IMHO. > Further, if your company produces products that kill or injure people, then why should we show any interest in maintaining that companies existence with odd legal hacks like this? This seems fairly debatable. J&J produces a lot of things that aren't talc, and it isn't like they are a cigarette company that knew the health risks. The risks from talc weren't known are are still debated, and it is a thing that has been used for thousands of years without known issues. Separately there's a good argument that keeping the company alive is better for those affected because it can fun ongoing liabilities.
- deleted 3y ago
  [deleted]
- dumpsterdiver 3y ago
  > Further, if your company produces products that kill or injure people, then why should we show any interest in maintaining that companies existence with odd legal hacks like this? > This seems fairly debatable. To be fair, we might not have some of the drugs many of us are prescribed to us if we just cancelled every company that ever hurt anyone with experimental drugs.
  - themitigating 3y ago
    Your use of "cancelled" seems to be an attempt to imply their actions are similar to a comedian using the N word. People died and they knew their product was dangerous. That's akin to murder.
    - dumpsterdiver 3y ago
      > Your use of "cancelled" seems to be an attempt to imply their actions are similar to a comedian using the N word. No, those are your words. The discussion I was participating in was talking about medication, not race warfare. My statement was also generalized, but you apparently applied it to a specific scenario (which I am unfamiliar with) that fits your narrative.
  - autoexec 3y ago
    J&J wasn't accidentally hurting people with experimental drugs. They had full knowledge that they were poisoning people, and they actively hid that from the people they were killing, because J&J wanted more of their victim's money before they died, and a continuous supply of new victims to take the place of the old ones.
  - ClumsyPilot 3y ago
    > cancelled every company that ever hurt anyone with experimental drugs. "This baby powder is an experimental drug and may have unknown and lethal side effects" - did it say this on the packaging? If it did, fair play. Some people would be happy to try experimental and dangerous cure for cancer. But somehow I have a suspicion that the potential market share for experimental and dangerous baby powder is about 0%.

littlestymaar 3y ago

But then it's J&J as a whole that should go bankrupt, no a shell company designed for damage-control purposes…

scott_w 3y ago
That’s all well and good until you discover that you were affected by something else they did but you can’t sue them any more because they went bust servicing the talc powder claims.
- littlestymaar 3y ago
  I know some of you love to be contrarians beyond reason, but come on, I'm sure you realize the insanity of your argument above…
- c0nducktr 3y ago
  Just because there are more people who might need to sue the company isn't a reason to allow it to continue to operate. This is just 'too big to fail' but for different (and now theoretical) reasons. Maybe the solution is to nationalize J&J. "You can't bankrupt my company because someone might need to sue me later" is absurd reasoning.
  - scott_w 3y ago
    And what good will bankrupting J&J at the first lawsuit do for society?
    - orthecreedence 3y ago
      "What good will it do society to punish people who do heinous things to others?" It acts as a great deterrent to keep other corporate stooges from entering into high-risk activities. In many cases I advocate for "restorative justice" as opposed to punishment, but in the case of faceless corporations we can crash their value to 0 and call it even. We have a system of private ownership where the owners get to reap the rewards of others' labor, but when they do something wrong they pull the "but think of the employees" bullshit. No. Full ownership, full liability.

FireBeyond 3y ago

Matt Levine's spin on this is horribly pro-corporate. The Texas Two-Step isn't a concept borne from bankruptcy courts. Would that it were so. You talk about charitability, but here's a question for Matt, you and others: "Is this strategy called the Texas Two-Step because: 1) it assists claimants and plaintiffs (your adversaries) to bond together and present one solid unified case against you, or... 2) because it assists you to elegantly dance around your liabilities?"

somenits 3y ago
You know you've lost the argument when your only response to actual facts and analysis is "yeah but what does this name sound like".
- FireBeyond 3y ago
  Alright then, here: The Texas two-step allows solvent companies to shield their assets from litigants using protections that are normally reserved for bankrupt companies. The goal of a Texas two-step is for the parent company to gain a third-party release of all liabilities it assigned to its spinoff, thus preventing litigants from pursuing those claims against the parent. And yet here we have multiple people trying to spin things as "Oh, J&J just want what is fair for the litigants!" Fun fact: the majority of large corporations who utilize the Texas Two Step somehow manage to avoid paying out anything more than a token sum, either through the "new" entity that holds the liabilities, or the "old" entity which promised it'd fully fund the liability holding entity. Georgia Pacific did this. Pledged $1B, ended up funding $175M. The entity went bankrupt three months later with 62,000 claims fighting over those scraps for mesothelioma (i.e. an average claimant getting less than $3,000 - before legal costs). Saint-Gobain did the same thing. More building products liabilities. Less than $100M in assets and no operations to fund more than 6,000 asbestos claims per year. > 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. Bankruptcy Judge Craig Whitley followed Gross’s testimony last August with factual findings that included his own blistering critique of the executives’ statements as “contrary to the evidence,” saying the company’s story “strains credibility.” Trane Technologies. Same deal. And yet you and Matt talk about how the whole concept is "designed to be more fair for the claimants". "Facts and analysis" in the three companies who have done this before J&J would disagree with you. Strongly.