Written by Ben DuBose, Trial Attorney | DuBose Law Firm, PLLC
Georgia-Pacific, the Koch Industries-owned paper and building products company, is reportedly preparing a new bankruptcy filing to resolve tens of thousands of pending asbestos and mesothelioma claims. The move would end one of the longest-running tests of the Texas Two-Step strategy, a maneuver that has blocked asbestos victims from receiving any compensation since 2017. No payments have been made. The terms of any new potential filing remain unknown.
The Wall Street Journal reported this week that Georgia-Pacific is preparing to abandon the Bestwall structure it created in 2017 and file a fresh bankruptcy through a different entity to resolve its asbestos claims. If confirmed, the move represents a strategic retreat after nearly a decade of failed attempts to achieve a confirmable plan under the original approach.
For workers and families dealing with a mesothelioma diagnosis tied to Georgia-Pacific or Bestwall Gypsum products, this development matters. It is not a resolution. The history of these cases argues strongly against assuming that a new bankruptcy will result in fair or timely compensation without sustained pressure from claimants and their attorneys.
What Georgia-Pacific Did in 2017
Georgia-Pacific was not facing financial collapse when it engineered the Texas Two-Step bankruptcy strategy. In 2017, the company became the first to execute this strategy, using a Texas divisional merger statute to split itself into two legal entities. Georgia-Pacific retained its profitable business assets. A newly created subsidiary called Bestwall LLC absorbed all of the company’s asbestos liabilities and filed for Chapter 11 bankruptcy approximately three months after its founding.
To access that Texas statute, the company moved its headquarters to Texas for less than five hours. Georgia-Pacific then claimed that Bestwall’s bankruptcy shielded the entire enterprise from accountability to the workers and families sickened by its products.
The legal effect was immediate. More than 64,000 pending asbestos claims were frozen overnight by the automatic stay that attaches to any bankruptcy filing. Workers dying of mesothelioma could no longer take their cases to a jury. They were told to wait for a bankruptcy trust to be established and approved by the court.
That was eight years ago. Since that filing, Bestwall has paid zero dollars to its approximately 56,000 current asbestos claimants. According to a bipartisan Senate amicus brief filed with the Supreme Court in March 2026, that number rises with every passing day as more victims are diagnosed with cancer.
Meanwhile, Georgia-Pacific kept operating and kept paying its parent company. Court filings disclosed that Koch Industries received more than $5 billion in dividends from Georgia-Pacific since Bestwall filed for bankruptcy in 2017. In fiscal year 2022 alone, Koch received a $2 billion special dividend plus four quarterly payments totaling $481 million, while tens of thousands of asbestos claimants received nothing.
What Georgia-Pacific Is Reportedly Planning Now
According to court filings and the Wall Street Journal’s reporting, Georgia-Pacific plans to use an existing affiliate or a newly created entity to file a fresh Chapter 11 case, seeking enough claimant support to fast-track a resolution. Law firms representing claimants have characterized this as the company having given up on the Bestwall approach after years of procedural battles and failed plan negotiations.
The financial terms of any bankruptcy trust are what determine whether victims receive meaningful compensation or a fraction of what a jury might have awarded. Payout schedules, disease category values, documentation requirements, and claimants’ rights to challenge the plan all matter enormously. None of those terms are public yet.
The Senate Weighed In Last Month
The Georgia-Pacific situation gained legislative attention in March 2026, when Senators Dick Durbin, Sheldon Whitehouse, and Josh Hawley filed a bipartisan amicus brief urging the U.S. Supreme Court to reject the Texas Two-Step strategy in the Bestwall case.
The senators argued that Congress intended bankruptcy relief only for debtors in genuine financial distress, not for profitable corporations using the bankruptcy system to manage tort liability on terms favorable to shareholders. Their brief warned that allowing Bestwall’s position to prevail would fuel abuses already transforming bankruptcy from a system of last resort into a corporate shield that denies tens of thousands of people their day in court.
The brief also highlighted direct human costs. The senators referenced testimony from Lori Knapp, whose father died from mesothelioma after exposure to Georgia-Pacific drywall products. The Knapp family was denied the opportunity to pursue their case in court because the bankruptcy stay blocked their lawsuit before it could be resolved.
Where the Courts Stand
In August 2025, the U.S. Court of Appeals for the Fourth Circuit upheld the Bestwall bankruptcy, rejecting asbestos claimants’ arguments that the case was filed in bad faith and should be dismissed so they could pursue lawsuits in state court. The court held that federal bankruptcy jurisdiction extends to solvent debtors, a ruling that validated the structural mechanics of the Texas Two-Step without endorsing its fairness.
Following that ruling, Bestwall’s junior creditors filed a petition asking the U.S. Supreme Court to weigh in on whether the strategy is legally permissible. That petition remains pending.
We covered the August 2025 ruling in detail when it was issued. The core takeaway for affected workers and families has not changed: the ruling allowed Georgia-Pacific to keep claims frozen while its parent company collected billions in dividends, and mesothelioma victims had no clear path to a jury trial. You can read our full analysis in our Bestwall Bankruptcy Ruling article.
This Is Part of a Broader Corporate Pattern
Georgia-Pacific was the first company to use the Texas Two-Step for asbestos liability, but it was not the last. Johnson and Johnson attempted the same strategy twice to resolve talc-related cancer claims — once through a subsidiary called LTL Management and again through Red River Talc. Both attempts failed under sustained legal opposition from claimants, courts, and Congress.
The pattern across these cases is consistent. A solvent company with billions in assets creates a subsidiary to hold liability, places it in bankruptcy, freezes all claims, and then attempts to negotiate a settlement on its own financial terms rather than face juries. The Johnson and Johnson experience demonstrated that this pattern can be interrupted when claimants and their attorneys refuse to accept bad-faith filings and courts hold the line. Whether Georgia-Pacific’s new approach will face similar resistance remains to be seen.
For context on how this strategy developed and how courts and Congress have responded across multiple cases, see our prior coverage:
- Johnson and Johnson Bankruptcy Attempt
- Johnson and Johnson Talc Bankruptcy Rejected
- Johnson and Johnson Talc Bankruptcy Settlement
- Mesothelioma, Talc, Ovarian Cancer and the Johnson and Johnson Bankruptcy Trial
- Bestwall Bankruptcy Ruling
Who Was Exposed to Georgia-Pacific and Bestwall Products
Georgia-Pacific’s asbestos liability traces primarily to its 1965 acquisition of Bestwall Gypsum Company, which manufactured drywall joint compound and related construction products containing asbestos. The most widely litigated product is drywall joint compound, applied wet to seams between panels and then sanded smooth after drying. Sanding releases fine dust into the air. When that compound contained asbestos fibers, workers inhaled them without warning or any meaningful protection.
Workers with the highest documented exposure include drywallers, plasterers, carpenters, painters, and general construction laborers who worked on new construction or renovation projects from the late 1950s through the mid-1970s. Factory workers who manufactured the materials faced direct, sustained contact with asbestos during production. Family members of these workers were also exposed through fibers carried home on clothing and work gear, a pattern known as secondary or take-home asbestos exposure.
What This Means If You Have a Claim
If you or a family member were exposed to Georgia-Pacific or Bestwall products and later diagnosed with mesothelioma, the Bestwall bankruptcy currently blocks direct lawsuits against Georgia-Pacific. That does not mean you have no legal options.
Mesothelioma victims are rarely exposed to asbestos from a single source. Construction sites, shipyards, refineries, and industrial facilities typically involved products from multiple manufacturers. Each of those companies may carry separate legal liability, and many have established asbestos trusts open for claims right now, regardless of what the Georgia-Pacific bankruptcy does or does not provide.
The timing of a new Georgia-Pacific filing also matters. If a new plan is proposed and a claimant vote is conducted before you have engaged an attorney, you may lose the ability to object to the compensation terms. An attorney experienced in asbestos litigation can evaluate your full exposure history, identify every potentially liable party, and protect your legal rights before any new filing changes the landscape.
If you have questions about a Georgia-Pacific or mesothelioma-related claim, speaking with an attorney who handles these cases is an important first step.
Ben DuBose is a trial attorney and founding partner of DuBose Law Firm, PLLC in Dallas, Texas. He has represented mesothelioma victims and their families for 30 years.
