> On January 30, 2023 the 3rd Circuit Court of Appeals ruled after an appeal that LTL's bankruptcy should be dismissed on the grounds that LTL was not in financial distress, reversing a previous ruling by the Bankruptcy Court. On April 4, 2023, LTL filed for a second bankruptcy. On July 28, 2023, Chief Judge Michael Kaplan of the U.S. Bankruptcy Court in New Jersey dismissed the second bankruptcy.
This is common to how it has played out before. Promises of funding, pledges, that then evaporate.
The entity that J&J spun off has attempted multiple times to declare bankruptcy, only to be thwarted some. When the Third Circuit made their ruling, they stated that "the time was not right" and questioned the amount of funding.
LTL re-filed for bankruptcy three hours after this ruling. (Why, was the time right, in the afternoon?)
Georgia Pacific did the same with Best Wall. Stood there in court and said they'd "fully fund" the liabilities into Best Wall, and that they'd put an initial $1B into seeding that entity. Court ruled, and things moved forward. At which point GP said "Actually, we meant $175M. And we meant that's all we'll ever fund."
St Gobain did the same thing. Faced with an estimated $50B+ in liabilities, they spun off another company, and promised to fully fund it. They ended up putting less than $100M in.
So audacious was St Gobain that they were laid into by the court:
> Gross testified that Saint-Gobain repeatedly misrepresented its intent in creating the subsidiary that eventually filed for bankruptcy, calling executives’ testimony and other statements “misleading” and “not truthful.” U.S. Bankruptcy Judge Craig Whitley followed Gross’s testimony last August with factual findings that included his own blistering critique of the executives’ statements as “contrary to the evidence,” saying the company’s story “strains credibility.”
When only four firms have tried this, and three of them have had the same outcome (which drastically protected those companies), and the fourth is using the same playbook (because all four used the same law firm), we (and Matt) need to forgive a healthy skepticism over "fully funded, for reals this time" when it comes to the Texas Two Step.