Supreme Court Rejects Challenge To Corporate Bankruptcy Maneuver Critics Say Shields Wealthy Companies

The U.S. Supreme Court on Monday declined to take up a major case involving the controversial “Texas two-step,” a corporate bankruptcy strategy critics say allows deep-pocketed companies to pause lawsuits by shifting legal liabilities into a separate entity.

The dispute centered on Bestwall, a unit of Georgia-Pacific LLC, which has remained in Chapter 11 bankruptcy since 2017 after a corporate restructuring placed Georgia-Pacific’s asbestos-related liabilities under Bestwall.

At the time of the bankruptcy filing, Georgia-Pacific was facing roughly 64,000 claims alleging that its drywall, wallboard, plaster and other construction products contained asbestos and caused cancer.

The Supreme Court had already declined to revisit a related petition in 2024.

In the latest appeal, cancer victims argued that Bestwall was abusing federal bankruptcy law to stop them from pursuing claims in other courts while failing to provide a realistic path toward resolving the litigation through bankruptcy.

The appeal challenged a 2025 decision by the 4th U.S. Circuit Court of Appeals, which refused to dismiss Bestwall’s bankruptcy case.

“Bankruptcy is the fastest path to a full and fair resolution of all asbestos plaintiffs,” Bestwall wrote in its reply filed with the Supreme Court.

The company blamed the prolonged fight on plaintiffs, arguing they had chosen to spend time and money challenging the bankruptcy instead of negotiating a settlement.

The petition drew support from seven amicus filings submitted by 11 law professors, three U.S. senators and other critics who urged the nation’s highest court to rein in what they view as wealthy corporations using bankruptcy protections to avoid ordinary civil accountability.

Bestwall has been at the center of a broader wave of disputed bankruptcies involving the Texas two-step maneuver.

The cancer victims argued that bankruptcy law should not be used as a shield for a financially powerful company like Georgia-Pacific.

Georgia-Pacific is widely known for consumer paper brands such as Brawny paper towels, Angel Soft toilet paper and Dixie cups.

According to the petition, Georgia-Pacific is worth tens of billions of dollars and has paid billions in shareholder dividends since Bestwall entered bankruptcy.

Attorneys for the cancer victims argued that the case has remained stuck in bankruptcy because of what they described as a flaw in the 4th Circuit’s approach to determining “bad faith” in bankruptcy filings.

The Supreme Court’s refusal to hear the case leaves the lower court ruling in place and allows Bestwall’s bankruptcy case to continue.

The decision comes just days after another closely watched Supreme Court ruling, this one involving a Mississippi death row inmate.

Last Thursday, the Court ruled in favor of Terry Pitchford in a narrow 5-4 decision, finding that he was denied a fair opportunity to challenge the prosecution’s removal of black jurors during his trial.

The ruling in Pitchford v. Cain vacated Pitchford’s capital murder conviction and death sentence, sending the case back to Mississippi. Prosecutors may still pursue a new trial.

The case centered not on Pitchford’s guilt or innocence, but on whether the trial court properly handled claims that black jurors were excluded in violation of Batson v. Kentucky, the 1986 Supreme Court precedent barring prosecutors from using peremptory strikes to remove jurors solely because of race.

The underlying case dates back to 2004, when Pitchford, then 18, and Eric Bullins, then 16, carried out a robbery at a grocery store in Grenada, Mississippi.

Prosecutors said Bullins fired the shots that killed store owner Reuben Britt.

Because Bullins was a juvenile at the time, he was constitutionally ineligible for the death penalty and ultimately received a 20-year prison sentence. Pitchford, however, was convicted of capital murder and sentenced to death.

The Supreme Court’s latest ruling gives Pitchford another chance to challenge how the jury was selected, while leaving prosecutors the option to retry the case.

Together, the two developments show a Supreme Court continuing to shape high-stakes questions over corporate accountability, bankruptcy power, jury selection and constitutional protections inside America’s legal system.