Congressional Hearing on Bankruptcy to Address Mass Tort Litigation

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ATRA Reiterates Support for Chapter 11 Bankruptcy Use to Address Mass Tort Litigation, Urges Meaningful Dialogue Amid Senate Judiciary Committee Hearing

In light of today’s Senate Judiciary Committee hearing regarding the use of Chapter 11 bankruptcy, the American Tort Reform Association (ATRA) reiterates its support for responsible and legitimate use of the bankruptcy process.

“The Chapter 11 bankruptcy process offers an equitable and practical means to resolve claims in a way that safeguards the rights of all parties involved,” ATRA President Tiger Joyce said. “In certain situations, the bankruptcy system is the only viable process to responsibly handle such claims. Respectfully, we do not agree with the Committee’s presenting this hearing as ‘Evading Accountability: Corporate Manipulation of Chapter 11 Bankruptcy.’”  

ATRA submitted a letter of testimony to the Senate Judiciary Committee outlining its continued support of keeping the bankruptcy process available to companies overwhelmed by the burden of litigation.

The rise of mass tort litigation has been fueled, in part, by third-party litigation funders. Last week, the House Oversight Committee held a hearing to address this hidden use of funding from outside investors.

“We are concerned with the prospect of restricting the ability of businesses that face overwhelming mass tort litigation to utilize the bankruptcy system to handle complex legal challenges,” Joyce said.

ATRA has consistently supported the use of bankruptcy to address claims. ATRA filed amicus briefs in various cases arguing the efficiency and effectiveness of bankruptcy in addressing mass tort litigation claims. The briefs also highlighted why the use of bankruptcy to address litigation claims is a valid bankruptcy purpose that has been historically recognized by courts across the country.

“By permitting the use of bankruptcy, courts can ensure a level playing field for all claimants, uphold fairness, and sidestep the pitfalls of traditional mass tort litigation,” Joyce said.

The flaws inherent in the mass tort system, including high-dollar awards, low evidentiary standards, and minimal barriers of entry, have failed to serve the interests of all parties involved in our civil justice system.

Unlike traditional mass tort litigation, bankruptcy ensures that claimants receive fair resolution without enduring the uncertainty, delays, and expenses often associated with lengthy trials.

The Senate Judiciary Committee hearing provides an opportunity for constructive dialogue about Chapter 11 bankruptcy, and ATRA hopes that this dialogue will foster an environment where legitimate bankruptcy use can effectively address complex mass tort claims.

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