Georgia-Pacific Plans New Bankruptcy, Abandoning Bestwall
Georgia-Pacific has "given up" on its Bestwall bankruptcy and plans a new Chapter 11 to resolve asbestos lawsuits, the Wall Street Journal reports.
Georgia-Pacific is preparing a new bankruptcy filing to resolve tens of thousands of asbestos-related lawsuits, abandoning an eight-year restructuring of its Bestwall unit that became one of the longest-running tests of a controversial corporate maneuver, the Wall Street Journal reported on April 13.
The pulp-and-paper manufacturer told law firms representing claimants that it has “given up” on the current Bestwall bankruptcy proceeding in North Carolina, according to a court filing by Marcus Raichle, an attorney for some asbestos claimants. The company now plans to use one of its existing affiliates, or a newly created entity, to file a new Chapter 11 case.
What the Court Filing Says
The Raichle filing summarized recent communications from Georgia-Pacific to plaintiffs’ counsel. According to the WSJ’s report, the company indicated it intends to seek enough claimant support for a faster resolution than the Bestwall case has produced.
Georgia-Pacific has not publicly confirmed the timing or structure of any new filing, and the WSJ report relied on the claimant lawyer’s filing rather than a company statement. As of publication, no new bankruptcy petition had been entered on a public docket.
The Bestwall Stalemate
Georgia-Pacific created Bestwall LLC in 2017 using a corporate restructuring known as the Texas two-step. The company assigned its asbestos liabilities to Bestwall, kept its operating assets and revenue elsewhere, and placed the new liability-holding entity into Chapter 11 in the Western District of North Carolina on August 28, 2017.
The asbestos liabilities trace back to Bestwall Gypsum, a manufacturer Georgia-Pacific acquired in 1965. Bestwall-branded joint compounds and other building products contained asbestos until the mid-1970s, and Georgia-Pacific has been a frequent defendant in mesothelioma litigation tied to those products. Construction trades, including drywall finishers, plasterers, and painters, were among the most heavily exposed.
The Texas two-step is a corporate restructuring strategy in which a company splits into two entities, assigns its liabilities to one of them, and then places that liability-holding entity into bankruptcy. Critics argue the tactic allows solvent parent companies to limit compensation for people harmed by their products.
The Bestwall filing triggered an automatic stay that froze pending and future asbestos lawsuits against Georgia-Pacific. In the years since, the bankruptcy court denied repeated motions to dismiss the case for bad faith, and no asbestos trust has been established. Claimants have not received payments through the proceeding.
Where the Litigation Stands
In 2025, the U.S. Court of Appeals for the Fourth Circuit affirmed the bankruptcy court’s jurisdiction over Bestwall, holding that a §524(g) asbestos debtor does not need to be in financial distress to use Chapter 11. The Official Committee of Asbestos Claimants sought rehearing en banc.
On October 30, 2025, the Fourth Circuit denied the en banc petition by a vote of 8 to 6. Judge Robert B. King wrote a dissent, calling the proceeding a “sham Chapter 11 bankruptcy” and arguing that the panel decision conflicted with Article I of the Constitution. The dissent noted that Georgia-Pacific has spent more than $2.9 billion defending asbestos claims since 1979.
The dissenters joined by Judge King were Judges Gregory, Wynn, Thacker, Benjamin, and Berner. The eight judges voting to deny rehearing were Chief Judge Diaz and Judges Wilkinson, Niemeyer, Agee, Harris, Quattlebaum, Rushing, and Heytens. Judge Richardson did not participate.
A petition for certiorari to the U.S. Supreme Court is pending, raising a circuit split with the Third Circuit’s 2023 dismissal of Johnson & Johnson’s first Texas two-step subsidiary, LTL Management.
What It Means for Claimants
A new Georgia-Pacific bankruptcy filing would not automatically transfer Bestwall’s existing claims or trust framework. The structure of any new case, including the proposed funding amount, the trust governance, and the treatment of pending and future claims, has not been disclosed.
Claimants currently in the Bestwall proceeding may face several scenarios. The existing case could be wound down, or run in parallel with a new filing, or be modified through a new plan. Lawyers representing claimants have indicated that any new structure will need broad claimant support to move quickly.
People with mesothelioma whose exposure history includes Georgia-Pacific products often have claims against multiple defendants. Joint compound manufacturers including U.S. Gypsum, National Gypsum, and Kaiser Gypsum established asbestos trusts through earlier bankruptcies, and those trusts continue to pay claims. Trust claims typically run alongside lawsuits against solvent defendants, premises owners, and employers.
References
Wall Street Journal. (2026-04-13). Georgia-Pacific Is Said to Prepare New Bankruptcy for Asbestos Lawsuits.
https://www.wsj.com/pro/bankruptcy/georgia-pacific-is-said-to-prepare-new-bankruptcy-for-asbestos-lawsuits-d4487b87
U.S. Court of Appeals for the Fourth Circuit. (2025-10-30). Bestwall LLC v. Official Committee of Asbestos Claimants, No. 24-1493, Order denying rehearing en banc.
https://www.ca4.uscourts.gov/opinions/241493R1.P.pdf
Reader Q&A
Frequently Asked Questions
What is the Bestwall bankruptcy?
Bestwall LLC is a Georgia-Pacific subsidiary created in 2017 through a corporate restructuring known as the Texas two-step. Georgia-Pacific assigned its asbestos liabilities to Bestwall and placed it in Chapter 11 in the Western District of North Carolina (case 17-31795). The bankruptcy paused asbestos lawsuits against Georgia-Pacific tied to legacy products such as Bestwall-branded joint compound.
What is the Texas two-step?
The Texas two-step is a corporate maneuver in which a company splits into two entities, assigns its litigation liabilities to one of them, and then files that liability-bearing entity for Chapter 11. The tactic has been used by Georgia-Pacific (Bestwall), Trane Technologies (Aldrich Pump and Murray Boiler), Saint-Gobain (DBMP), and Johnson & Johnson (LTL Management and later Red River Talc). Critics argue it lets solvent parent companies cap payouts.
How is Georgia-Pacific's case different from Johnson & Johnson's talc bankruptcies?
The Third Circuit dismissed J&J’s first Texas two-step subsidiary, LTL Management, in 2023, holding that the debtor was not in financial distress. The Fourth Circuit took the opposite view in Bestwall, ruling in 2025 that an asbestos debtor seeking a §524(g) trust does not need to show financial distress. The split between circuits is a central question in the pending Supreme Court petition.
What happens to existing claims if Georgia-Pacific files a new case?
The structure of a potential new Chapter 11 has not been disclosed, so the impact on existing claims is uncertain. A new filing could establish a §524(g) trust, run alongside the Bestwall case, or wind down the Bestwall proceeding entirely. Any new case would still need confirmation by a bankruptcy court and approval by claimants under bankruptcy code voting thresholds.
What is the average payout for a mesothelioma settlement?
Average mesothelioma settlements range from $1 million to $1.4 million for people with mesothelioma filing personal injury or wrongful death claims. Trial verdicts average higher, from $2.4 million to $20.7 million, though fewer than 5% of cases reach trial. Asbestos trust fund payouts average $300,000 to $400,000. Actual amounts vary by case factors like exposure history and defendant liability. These figures come from law firm reports on 2026 cases.
How much does a mesothelioma lawyer cost?
Most mesothelioma attorneys work on a contingency fee basis, with no upfront costs or hourly fees for people with mesothelioma. Fees typically range from 33% to 40% of any compensation recovered through settlement or verdict, though some firms charge 33% to 45% depending on case complexity. Additional service costs, such as court filings and expert witnesses, are often covered by the firm and deducted from the award if successful. Average mesothelioma settlements range from $1 million to $2 million, while trial verdicts average $5 million to $20.7 million. People with mesothelioma retain 55% to 70% of the total compensation after fees.
Is there still asbestos litigation?
Yes, asbestos litigation continues actively in 2026, with new mesothelioma lawsuits emerging due to the 20-50 year latency period of asbestos-related diseases. In 2024, 1,907 mesothelioma lawsuits were filed in the U.S., and filings have risen 15% since 2022 according to KCIC data. Claims target companies via individual lawsuits or over 100 bankruptcy trusts, with recent cases including a 2024 Oregon jury award of $260 million against Johnson & Johnson for talc-related mesothelioma. Ongoing trends show plateaued or increasing annual filings as more people with exposure from the 1970s-1990s receive diagnoses.
Am I in trouble if I sanded asbestos?
Sanding asbestos releases airborne fibers that people can inhale, potentially increasing the risk of mesothelioma, lung cancer, and asbestosis, with effects often appearing 20-40 years later. No safe level of exposure exists, though risk depends on fiber concentration, duration, ventilation, and factors like smoking, which synergistically elevates lung cancer odds. Short-term incidents like sanding carry lower risk than prolonged occupational exposure but still warrant concern due to the dose-response relationship. OSHA notes exposures as brief as days have caused mesothelioma in humans. Evidence shows fibers lodge in lung tissue, causing inflammation and scarring over time.