Senators Slam Corporate Bankruptcy Maneuver as ‘Dirty Trick’

Senate Judiciary Committee members on Tuesday said an increasingly popular corporate bankruptcy maneuver is an abuse of the law and an attempt by companies to avoid accountability.

Committee Chair Dick Durbin (D-Ill.) said the so-called Texas Two-Step strategy undertaken by Johnson & Johnson, Georgia-Pacific, and other companies is an attempt to bypass the tort system. Companies will likely “continue to try to manipulate bankruptcy in similar ways,” he said.

“That’s not what the Congress intended when it created bankruptcy,” Durbin added during the panel’s hearing on companies’ use of Chapter 11 bankruptcy. “It’s not something we should allow to ...