Adam Silverstein Quoted in The Wall Street Journal on Risk of Forum Shopping Abuse in Texas Two-Step Cases
October 2, 2025
The Wall Street Journal has quoted Otterbourg partner Adam Silverstein in the article “Is the Music Over for the Texas Two-Step?”
The article notes that lately, many courts—especially the U.S. Court of Appeals for the Third Circuit—have rejected the so-called “Texas Two-Step,” a process in which a solvent parent company spins off its liabilities into a new unit that then seeks bankruptcy protection, saying the claimed financial problems were fake. Other courts like the Fourth Circuit still allow it, however, keeping the tactic alive but controversial.
Silverstein, who has represented claimants in the bankruptcy of Johnson & Johnson subsidiary LTL Management (click here to learn more), explains that this divide has sparked worries about forum-shopping, where companies choose a friendly court without a valid connection.
“If you’re a company with a goal of stopping claims in their tracks, then the Fourth Circuit is available for that,” Silverstein said, “When you’re a shell company with no operations and no employees, what difference does it make?”
Read the full article HERE.