Senators Oppose Georgia-Pacific Two-Step Process Avoiding Financial Responsibility

Having to file with the VA for issues resulting from being stationed at Camp Lejeune, I can see why such a maneuver by Koch Industries is frustrating. GP is attempting to avoid all responsibility. At least, the VA will hear you out. Then take their time deciding. One family friend (Marine) had to file three times before the VA accepted his claim. He died shortly afterwards.

Georgia-Pacific’s Asbestos Trust Fund Opposed by Senators

by Devin Golden

Mesothelioma Guide

A bipartisan trio of U.S. Senators issued a scathing statement opposing Georgia-Pacific’s attempt to file for bankruptcy, create a small asbestos trust fund to pay off claimants, and avoid lawsuits from people affected by asbestos exposure in their products.

This strategy is called the “Texas Two-Step.”

A legal maneuver employed by many asbestos manufacturing companies and other companies involved in the production and sale of asbestos goods. The strategy involves creating a shell subsidiary company to absorb legal liabilities, and then having the subsidiary file for bankruptcy to avoid facing lawsuits.

Asbestos exposure is the only known cause of mesothelioma, which is a rare cancer that forms in the lining of the lungs or abdomen. An estimated 2,500-3,000 people in the U.S. are diagnosed with mesothelioma cancer each year. The average life expectancy following diagnosis is 12-14 months.

The companies involved in the production and sale of asbestos are legally responsible to compensate the victims of the cancer. To avoid greater compensation, the companies have used the Texas Two-Step strategy to minimize the compensation amount they would have to pay people. This has led to backlash from people – including U.S. Congress members – who claim the Texas Two-Step is unethical as it denies victims their chance to take the wrongdoing companies to court.

Background of Georgia-Pacific and Bestwall, LLC

Georgia-Pacific created the shell company Bestwall, LLC to absorb legal liabilities from tens of thousands of asbestos lawsuits. The name Bestwall is a nod to the former wallboard, joint compound and drywall manufacturer Bestwall-Gypsum, which Georgia-Pacific purchased in 1965.

Bestwall filed for Chapter 11 reorganization bankruptcy in 2017, a type of bankruptcy companies use for the Texas Two-Step.

Georgia-Pacific sold a range of products containing asbestos:

  • Wallboards
  • Drywall adhesive
  • Acoustical plaster
  • Roof coating
  • Joint compounds
  • Other compound types (bedding, spackling, laminating and topping)

As part of the bankruptcy attempt, Georgia-Pacific committed $1 billion in 2020 to fund the Bestwall trust. This money would help settle pending claims and compensate future claimants who have been affected by asbestos diseases such as mesothelioma.

The Bestwall asbestos trust fund is for anyone diagnosed with mesothelioma or asbestos-related lung cancer who meets any one of these three criteria:

  • Worked for Bestwall-Gypsum or Georgia-Pacific
  • Worked with or around any Bestwall-Gypsum or Georgia-Pacific asbestos-containing products
  • Are family members of Bestwall-Gypsum or Georgia-Pacific workers

AB: As someone who has filed for being at Camp LeJeune, showering and drinking the water over a two-year period; I can tell you this is difficult. It is not a slam-dunk. It is difficult in documenting the blood related issues experienced over a period of time as being caused by the water while serving there. I can document my being there. All that is left is showing it related to one of the presumptive conditions. From the beginning, you are fighting from a defensive position.

However, Georgia Pacific’s trust has not been approved yet due to several objections from asbestos claimants and other creditors. In 2023, the Fourth Circuit Court of Appeals allowed Georgia-Pacific to continue the bankruptcy process while any pending lawsuits against the parent company remained paused.

In February 2024, Chief Bankruptcy Judge Laura Beyer in Charlotte, North Carolina, upheld this ruling, stating the U.S. Constitution does not require a company to be in “financial distress” when filing for bankruptcy.

Senators Urge U.S. Supreme Court to Intervene

Chair of the Senate Judiciary Committee and the Senate Majority Whip Dick Durbin (D-IL), led fellow Senate Judiciary Committee colleagues [including Senators Sheldon Whitehouse (D-RI) and Josh Hawley (R-MO)] in submitting an amicus brief to the U.S. Supreme Court regarding the bankruptcy case Bestwall LLC v. Official Committee of Asbestos Claimants. The brief supports the hundreds of thousands of victims of the company’s asbestos-linked products.

According to the statement from the U.S. Senate Committee on the Judiciary, Georgia-Pacific is attempting to file for bankruptcy “to avoid facing the legal claims of victims in court.” According to the Senators’ statement, the company’s strategy involves moving to Texas “for less than five hours” and “offloading its asbestos-related liabilities onto a shell company called Bestwall. Then putting Bestwall into bankruptcy and claiming that Bestwall’s bankruptcy protected the entire Georgia-Pacific enterprise from accountability.”

The U.S. Senators also wrote, “The bankruptcy system was not designed to provide solvent non-debtors with the option to simply decline to be held liable for alleged wrongdoing, but that is precisely what the Fourth Circuit’s decision permits. Bestwall’s successful attempt to enjoin hundreds of thousands of legal claims against Georgia-Pacific exemplifies both the benefit of the Texas Two-Step to tortfeasors and the cost of the maneuver to the American people. It challenges the integrity of the bankruptcy system itself.”

According to a report from Reuters, the attorneys general from 24 states have joined the three Senators in asking the Supreme Court to reject the bankruptcy plan.

Asbestos Trust Funds: Average Payouts & Complete Process, Mesothelioma Guide, Carl Jewett