Mass-Tort Bankruptcies

Summary

This practice note discusses companies that file bankruptcy to address their mass-tort liabilities. Section 524(g) of the Bankruptcy Code provides a mechanism for a debtor with significant asbestos liability to restructure and emerge as a viable business entity while providing funding to pay current and future claimants. Section 524(g) does not apply to other mass-tort liabilities. However, companies facing such liabilities have used the Section 524(g) model to address mass-tort claims. This practice note details such asbestos and non-asbestos mass-tort bankruptcy cases while also discussing the background and issues pertinent to addressing mass-tort liability in bankruptcy. This practice note does not address the so-called Texas Two Step. In recent years, several solvent companies have utilized a two-step strategy for using Chapter 11 bankruptcy to address mass-tort liability. For information on that process, see The Texas Two-Step.