Bayer’s Texas Two-Step Bankruptcy Strategy: A Desperate Move or Strategic Play?
In a recent article planted in Bloomberg, Bayer is purportedly exploring the Texas Two-Step bankruptcy strategy, a tactic that involves separating assets and liabilities to facilitate negotiation in mass tort cases. The strategy, named after a Texas law, allows companies to push the liability-heavy unit into bankruptcy while negotiating a comprehensive settlement.
However, history shows that such strategies are less effective in mass tort cases involving solvent companies, as seen in the cases of 3M Co. and Johnson & Johnson. Despite experts casting doubts on the success of the Texas Two-Step for Bayer, the move indicates a level of desperation to resolve the Roundup litigation.
The Leak and its Implications
The leak of Bayer’s potential strategy to Bloomberg is believed to be a calculated move to pressure plaintiffs and their lawyers into hastening the settlement process. For plaintiffs, many of whom have suffered extensively due to Roundup exposure, a settlement would offer much-needed relief and justice. Plaintiffs’ lawyers, on the other hand, face financial pressures, often financing cases with significant debt in 2024.
The Threat and Incentive for Settlement
While the Texas Two-Step might only provide a temporary delay, it serves as a potent threat that could compel plaintiffs and their lawyers to be more flexible in negotiations. For plaintiffs’ lawyers, a swift settlement is preferable to avoid accruing more debt and financial strain. Bayer’s move targets these lawyers, leveraging their financial circumstances to push for a resolution.
Indications of a Roundup Settlement
The potential consideration of the Texas Two-Step by Bayer could be interpreted as a sign that a Roundup settlement might be imminent in 2024. The company’s willingness to explore such strategies indicates a shift in its approach, possibly towards a more conciliatory stance in negotiations.
In conclusion, Bayer’s reported contemplation of the Texas Two-Step bankruptcy strategy suggests a complex interplay of legal tactics, financial pressures, and the quest for resolution in the Roundup litigation. While the strategy’s effectiveness remains uncertain, its impact on settlement negotiations and the future of the Roundup litigation is significant.
