The bankruptcy maneuver a Jones Day partner called the “greatest innovation in the history of bankruptcy” is in jeopardy following a recent U.S. Court of Appeals for the Third Circuit ruling in late January, which found that solvent companies cannot splinter off mass tort liabilities into affiliated companies that immediately file for bankruptcy.

To date, four bankruptcies filed between 2017 and 2011 have employed the ”Texas Two-Step,” the product of bankruptcy partner Gregory Gordon, earning Jones Day $107 million in fee revenue.

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