Attorney General Josh Stein Requests Supreme Court Intervention to Curb Corporate Abuse of Bankruptcy Law
A Call for Justice and Accountability
In a bold move that signals a new era of corporate accountability, North Carolina Attorney General Josh Stein has taken the lead in a bipartisan coalition of 24 attorneys general, urging the United States Supreme Court to review a lower court’s decision that has far-reaching implications for enforcing laws against corporate wrongdoing. The case in question, _Official Committee of Asbestos Claimants vs. Bestwall LLC_, centers on a controversial corporate tactic known as the “Texas Two-Step,” which allows wealthy corporations to evade liability for their actions by exploiting loopholes in the bankruptcy process.
Addressing Corporate Abuse of Bankruptcy Law
Attorney General Stein’s unwavering stance against corporate abuse of the bankruptcy system is a testament to his commitment to safeguarding the interests of North Carolina residents. He firmly believes that companies should not be allowed to escape accountability for their misconduct by manipulating the legal system. In his own words, “Wealthy companies that engage in wrongdoing should not be able to get off the hook by cheating the legal system. We ask that the Supreme Court take up this case and put an end to this abusive practice.”
Understanding the Texas Two-Step Scheme
The Texas Two-Step is a carefully orchestrated maneuver that enables wealthy corporations facing legal consequences for their actions to limit their liability. The scheme involves creating a new corporate affiliate, transferring the liability for wrongdoing to this newly formed entity, and then filing for bankruptcy on behalf of the affiliate. This strategic move effectively halts lawsuits and government enforcement actions, providing the corporation with leverage to negotiate favorable terms for resolving its liabilities through a protracted bankruptcy process. The corporation itself remains unscathed, while the affiliate bears the brunt of the bankruptcy proceedings.
Supreme Court Review Sought to Prevent Widespread Abuse
The attorneys general, led by Attorney General Stein, argue in their brief to the Supreme Court that the lower court’s decision not to block this abuse of the bankruptcy process sets a dangerous precedent. They emphasize the urgent need for the Supreme Court to intervene and review the case, as it has the potential to open the floodgates for companies nationwide to engage in this scheme. Such a scenario would undermine the ability of states to protect their residents from corporate misconduct and weaken the integrity of the bankruptcy system.
A United Front Against Corporate Abuses
Attorney General Stein is joined in this legal challenge by a formidable coalition of attorneys general from across the nation, representing a diverse spectrum of states. This bipartisan alliance underscores the widespread concern among state leaders about the harmful consequences of allowing corporations to manipulate the bankruptcy system. The collective effort demonstrates a unified commitment to upholding the rule of law and ensuring that corporations are held accountable for their actions.
Conclusion: A Call for Justice and Accountability
Attorney General Stein’s initiative to bring this case before the Supreme Court is a significant step in the fight against corporate abuse of the bankruptcy system. The outcome of this case has far-reaching implications for the ability of states to protect their citizens from corporate wrongdoing and preserve the integrity of the bankruptcy process. The Supreme Court’s decision will determine whether corporations can continue to evade accountability for their actions by exploiting legal loopholes or whether justice and accountability will prevail.
Copy of the Brief Available Online
A copy of the brief filed with the Supreme Court is available for public access. This comprehensive document provides a detailed explanation of the legal arguments presented by the attorneys general and underscores the urgency of the matter.
Additional Information and Resources
For further information regarding this case and Attorney General Stein’s ongoing efforts to protect North Carolina residents from corporate abuses, please visit the North Carolina Department of Justice website.