Talk:Texas two-step bankruptcy

Did you know nomination

The following is an archived discussion of the DYK nomination of the article below. Please do not modify this page. Subsequent comments should be made on the appropriate discussion page (such as this nomination's talk page, the article's talk page or Wikipedia talk:Did you know), unless there is consensus to re-open the discussion at this page. No further edits should be made to this page.

The result was: promoted by Bruxton (talk) 01:53, 12 February 2023 (UTC)

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• Comment or view
• Article history

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• ... that the Texas two-step bankruptcy is a controversial method used by companies to resolve their liabilities while protecting their assets? Source: "To handle these mass tort liabilities, Johnson & Johnson has followed the lead of many businesses and turned to the bankruptcy courts. But it has done so with a twist. Unlike the businesses that pioneered using bankruptcy for mass torts, Johnson & Johnson is not filing for bankruptcy. Instead, it is dividing itself using an obscure Texas law, moving its assets into one business and its talc liabilities into another, and having the liability-laden business file for bankruptcy. This maneuver, known as the “Texas Two-Step,” threatens the tort recovery of tens of thousands of talc claimants." (internal citation omitted) Michael A. Francus, "Texas Two-Stepping Out of Bankruptcy" Michigan Law Review June 2022 https://michiganlawreview.org/texas-two-stepping-out-of-bankruptcy/
  • ALT1: ... that a Texas two-step is a controversial bankruptcy strategy in which a company splits in two before having one half declare bankruptcy? Source: Michigan Law Review June 2022 https://michiganlawreview.org/texas-two-stepping-out-of-bankruptcy/
  • ALT2: ... that in a Texas two-step a solvent parent company accesses bankruptcy courts by creating a spin-off with the parent's liabilities but none of its assets? Source: Michael A. Francus, "Texas Two-Stepping Out of Bankruptcy" Michigan Law Review June 2022 https://michiganlawreview.org/texas-two-stepping-out-of-bankruptcy/
  • Reviewed:
  • Comment: My first nomination! Please help me with the hooks if you think this article is suited for DYK.

Moved to mainspace by BananaCarrot152 (talk). Self-nominated at 19:19, 5 February 2023 (UTC). Note: As of October 2022, all changes made to promoted hooks will be logged by a bot. The log for this nomination can be found at Template talk:Did you know nominations/Texas two-step bankruptcy, so please watch a successfully closed nomination until the hook appears on the Main Page.

• I'm in! I'll review this one, but I'll start by pointing out that this is a great candidate for a goofy hook for the end of the queue, or even for April Fool's, something along the lines of "... that a solvent company can access the bankruptcy courts by doing the Texas two-step?"
  • I love it, great idea! Thank you for reviewing. :) BananaCarrot152 (talk) 20:12, 7 February 2023 (UTC)
    • ALT3: "... that a solvent company can access bankruptcy courts by performing the Texas two-step?" BananaCarrot152 (talk) 20:33, 7 February 2023 (UTC)
      • Here in Texas, dancing the dance is called "doing the two-step", so I'd word it that way, but it's up to you to propose. I've given it a read, and I hope to check through the sources tomorrow. -Bryan Rutherford (talk) 23:18, 7 February 2023 (UTC)

General: Article is new enough and long enough
New enough: Long enough:

Policy: Article is sourced, neutral, and free of copyright problems
Adequate sourcing: Neutral: Free of copyright violations, plagiarism, and close paraphrasing:

Hook: Hook has been verified by provided inline citation
Cited: Interesting:

QPQ: None required.

Overall: The article was new enough to mainspace when nominated, is easily long enough (>7,000 chars), and no QPQ is needed. The cited sources support the substantive content of the article, and I'm not seeing any signs of plagiarism from online sources. All of the proposed hooks are supported by citations in the article. I think ALT4 is the most interesting. There are a couple of points made that are not currently cited to a source, and I couldn't quickly find them in the sources nearby; if those can be handled, then the article should be ready to run. My concerns have been addressed, and the article looks ready to go. Good work! Bryan Rutherford (talk) 03:06, 9 February 2023 (UTC)

Per above explanation of "doing the two-step"; ALT4: "... that a solvent company can access bankruptcy courts by doing the Texas two-step?" BananaCarrot152 (talk) 03:18, 9 February 2023 (UTC)

Inaccurate information

This line "While Texas divisive mergers have existed since 1989, only four companies have employed them to facilitate a subsequent bankruptcy to shield the parent company from tort liabilities as part of a Texas two-step." Is not true. More than four companies have used TTS for tort liability. Source 3 on this page mentions Bestwall and CertainTeed. I believe 3M also did it (https://www.ft.com/content/82ee5808-716e-47ae-acfb-2aba4b3d1502). This number should be changed. 209.2.231.221 (talk) 21:42, 28 March 2023 (UTC)

Thanks for your comment. My read of the sources is that 4 parent companies have used it: Georgia-Pacific (into Bestwall), CertainTeed, Trane Technologies, and J&J. I can't access the FT article, but my understanding of the 3M case is that 3M is using a pre-existing subsidiary to file for bankruptcy, rather than creating a new subsidiary via a Texas divisive merger. I think a separate wikipedia article on 3rd party releases in US Bankruptcy would be the best place for cases like 3M...maybe I'll have time some day to write it (3rd party releases are when a company or person uses another's bankruptcy to get a release -- like the parent companies in Texas two-steps or 3M). Happy to reevaluate further if you think I've got this wrong. BananaCarrot152 (talk) 23:36, 4 April 2023 (UTC)