Bestwall notches another appellate victory, allowing it to proceed with Chapter 11 bankruptcy case

Client(s) Bestwall LLC

Jones Day represented Bestwall LLC, a Georgia-Pacific affiliate, in securing an appellate victory before the Fourth Circuit, which rejected a jurisdictional attack on Bestwall's ongoing Chapter 11 case. Bestwall was created in a divisional merger and filed for bankruptcy to address asbestos mass-tort liabilities. Five years in, the Asbestos Claimants' Committee moved (for a third time) to dismiss, arguing (for the first time) that Bestwall's solvency made it an improper debtor under the Constitution's Bankruptcy Clause. Insisting that Bestwall is not "actually bankrupt," the Committee attempted to frame its eligibility argument as a challenge to subject-matter jurisdiction. The bankruptcy court denied the motion to dismiss.

On appeal, the Fourth Circuit affirmed in a published 2-1 decision. It agreed with Jones Day's lead argument that jurisdiction is conferred not by the Bankruptcy Clause but by Article III of the Constitution and statute, both of which Bestwall's case satisfies. And the court declined to accept the Committee's argument that "financial distress" is required for bankruptcy. The Committee sought en banc review, which the full court voted to deny. This is the fourth published circuit-court opinion in which Bestwall, represented by Jones Day, has prevailed, moving Bestwall closer to resolving its asbestos liabilities.

The Official Committee of Asbestos Claimants of Bestwall LLC v. Bestwall LLC, No. 24-1493 (4th Cir.)