Over the last several years, companies plagued with massive toxic tort liabilities have attempted to utilize a statutory process known as the “Texas Two Step,” created under Texas’ Business Organizations Code Section 1.002(55)(A),
Fourth Circuit: Subject-Matter Jurisdiction In Bankruptcy Depends On Statute, Not Debtor Solvency
The Fourth Circuit’s opinion focused on answering the core question presented — whether jurisdiction is determined by statute, rather than by a debtor’s financial condition. It reasoned that since the Constitution grants Article III power over “all cases arising under the laws of the United States” and the Bankruptcy Code is a law under the United States, the petition to reorganize under Chapter 11 of the Bankruptcy Code is clearly within the judicial ambit of the U.S. Bankruptcy Court.

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