Silencing Litigation Through Bankruptcy
Description
From Johnson & Johnson (J&J) and Purdue Pharma, to the Boy Scouts of America, USA Gymnastics and the Catholic Church, bankruptcy has increasingly become a tool for powerful companies (and the individuals that own and operate them) to quickly and efficiently settle lawsuits—which we term onslaught litigation. In our forthcoming article, Silencing Litigation Through Bankruptcy, we detail how companies leverage the chapter 11 bankruptcy process to gather together those who allege harm and, using the forces of the reorganization process, pressure enough of them to settle their claims. Chapter 11’s relatively expeditious process offers the alluring prospect of depriving those who allege harm the opportunity to have their voices heard and of keeping the public from learning the full truth. We argue that these two outcomes are what companies that turn to chapter 11 to deal with onslaught litigation seek, even if they do not say so. Through a review of bankruptcy’s benefits, along with a deep dive into recent chapter 11 cases filed to deal with onslaught litigation, we shed light on this abusive use of bankruptcy. We also propose a framework for how onslaught litigation can (if ever) be resolved using chapter 11.
