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If you have a single product that kills people, you aren't legally allowed to put all your liabilities and none of your assets into another (non-shell, by your

If you have a single product that kills people, you aren't legally allowed to put all your liabilities and none of your assets into another (non-shell, by your definition) company to get out of your liabilities. [0] What's happening here is quite similar. [0] See, for example, the J&J case, which was an even more generous form of the same.

singleshot_ 3y ago
Let's say I have $100 in assets and $10 in liabilities. The assets consist of Nike sneakers I'd like to sell; the liabilities consist of bags of trash that would cost me $30 to throw away at the dump. I'm lazy, so sell some shoes and I pay the trash man $35 to take the liabilities away. I have put all my liabilities in one company (the trash man) and left all my assets in my company. Now, I have a company with a few Nike assets and no liabilities. One of the pairs of shoes catches on fire and becomes a smelly, smoking liability. I sell the rest of the shoes and return the money to the shareholders, leaving the company only owning the burned shoe liability. Now all of the company's assets belong to the shareholders, and all the company has is liabilities. Which law did I break?
- lesuorac 3y ago
  That's not what assets and liabilities are ... Your bag of trash would still be listed on the Assets side but expenses on trash removal would be on the liabilities side.
  - singleshot_ 3y ago
    It depends. If you feel that metaphor is poor let's try this: One bag of trash magically turns into a loan that I have taken from a bank. I am obligated to repay $35 at an adjustable interest rate. Because I don't like risk, I pay another bank $45 and they take over the loan. Now I have assets and the second bank has the liability (the first bank, of course, still lists the loan as an asset).
tiahura 3y ago
How are they remotely similar? Amazon has trillions of products and hasn’t spun off its liabilities anywhere. Amazon simply decided they want to limit the extent to which they are in the the last mile delivery business.
parineum 3y ago
> [0] See, for example, the J&J case, which was an even more generous form of the same. I think you have seen a very simplified view of that situation, likely provided by the opposing lawyers. J&J has agreed to give that company 2 billion dollars and the bankruptcy filing would, essentially, be forcing the lawsuit against them to be settled for 2 billion dollars and then, most importantly to J&J, the matter wouldn't be a concern for the future. They are trying to limit being perpetually sued for the same issue. There's also the situation where the bankruptcy judge has to accept the situation, [1] which did not happen, twice. [1] https://news.bloomberglaw.com/bankruptcy-law/j-j-is-left-weighing-options-after-second-talc-bankruptcy-tossed https://news.bloomberglaw.com/bankruptcy-law/j-j-is-left-wei...
- vkou 3y ago
  > They are trying to limit being perpetually sued for the same issue. Why shouldn't they be perpetually sued for the same issue, until they've fully paid their debt to society, and every person they've harmed is made whole?
  - parineum 3y ago
    I made no argument that they shouldn't, that's just what they are doing. I replied to point out that the attempts to limit their liability to 2 billion dollars has, so far, failed.
    - FireBeyond 3y ago
      Somewhat. There's not a whole lot that can actually be done. Georgia Pacific was faced with 62,000+ claims. They went through this same process. Spun off their subsidiary. "Pledged" to fund it with an "initial" billion dollars, and that GP would fund all claims. Never happened. They actually only funded $175M. Less than $3,000 per claimant for asbestos related injuries. That is, less than $3,000 before legal fees. And there was nothing defendants could do, because there was no legal obligation that could be created to force GP to fully fund. "That entity is independent and is in bankruptcy. So sad, too bad."

singleshot_ 3y ago

Let's say I have $100 in assets and $10 in liabilities. The assets consist of Nike sneakers I'd like to sell; the liabilities consist of bags of trash that would cost me $30 to throw away at the dump. I'm lazy, so sell some shoes and I pay the trash man $35 to take the liabilities away. I have put all my liabilities in one company (the trash man) and left all my assets in my company. Now, I have a company with a few Nike assets and no liabilities. One of the pairs of shoes catches on fire and becomes a smelly, smoking liability. I sell the rest of the shoes and return the money to the shareholders, leaving the company only owning the burned shoe liability. Now all of the company's assets belong to the shareholders, and all the company has is liabilities. Which law did I break?

lesuorac 3y ago
That's not what assets and liabilities are ... Your bag of trash would still be listed on the Assets side but expenses on trash removal would be on the liabilities side.
- singleshot_ 3y ago
  It depends. If you feel that metaphor is poor let's try this: One bag of trash magically turns into a loan that I have taken from a bank. I am obligated to repay $35 at an adjustable interest rate. Because I don't like risk, I pay another bank $45 and they take over the loan. Now I have assets and the second bank has the liability (the first bank, of course, still lists the loan as an asset).

tiahura 3y ago

How are they remotely similar? Amazon has trillions of products and hasn’t spun off its liabilities anywhere. Amazon simply decided they want to limit the extent to which they are in the the last mile delivery business.

parineum 3y ago

> [0] See, for example, the J&J case, which was an even more generous form of the same. I think you have seen a very simplified view of that situation, likely provided by the opposing lawyers. J&J has agreed to give that company 2 billion dollars and the bankruptcy filing would, essentially, be forcing the lawsuit against them to be settled for 2 billion dollars and then, most importantly to J&J, the matter wouldn't be a concern for the future. They are trying to limit being perpetually sued for the same issue. There's also the situation where the bankruptcy judge has to accept the situation, [1] which did not happen, twice. [1] https://news.bloomberglaw.com/bankruptcy-law/j-j-is-left-weighing-options-after-second-talc-bankruptcy-tossed https://news.bloomberglaw.com/bankruptcy-law/j-j-is-left-wei...

vkou 3y ago
> They are trying to limit being perpetually sued for the same issue. Why shouldn't they be perpetually sued for the same issue, until they've fully paid their debt to society, and every person they've harmed is made whole?
- parineum 3y ago
  I made no argument that they shouldn't, that's just what they are doing. I replied to point out that the attempts to limit their liability to 2 billion dollars has, so far, failed.
  - FireBeyond 3y ago
    Somewhat. There's not a whole lot that can actually be done. Georgia Pacific was faced with 62,000+ claims. They went through this same process. Spun off their subsidiary. "Pledged" to fund it with an "initial" billion dollars, and that GP would fund all claims. Never happened. They actually only funded $175M. Less than $3,000 per claimant for asbestos related injuries. That is, less than $3,000 before legal fees. And there was nothing defendants could do, because there was no legal obligation that could be created to force GP to fully fund. "That entity is independent and is in bankruptcy. So sad, too bad."