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Mass Exploitation

Modern mass tort defendants—including Johnson & Johnson, Purdue Pharma, USA Gymnastics, and Boy Scouts of America—have developed unprecedented techniques for resolving mass tort cases. Three weapons in this new arsenal are particularly noteworthy. Before filing for bankruptcy, corporate defendants undergo divisive mergers to access bankruptcy on their terms. Once in bankruptcy, these mass restructuring debtors curate advantageous provisions in the Bankruptcy Code to craft their own ad hoc resolution mechanism implemented through plans of reorganization. This maneuver facilitates questionable outcomes, including the third-party releases the Sackler family recently secured. Finally, a mass restructuring debtor can agree to convert its tainted business into a public benefit corporation after bankruptcy and devote future profits—no matter how speculative they may be—to victims in exchange for a reduced financial contribution to the victims’ settlement trust.