Evaluation of the Texas Two-Step

Abstract

When you hear the phrase “Texas Two-Step,” what do you think of? Perhaps the classic dance move, or the dubious state lottery. But for many plaintiffs, corporations, attorneys, and members of Congress, the Texas Two-Step is a legal dance move that could alter not just their fates, but the fate of the U.S. bankruptcy system. Yet, despite the hordes of articles condemning the Texas Two-Step, hardly anyone has taken a comprehensive approach to evaluating the merits (and demerits), potential causes, and prescribed policies addressing this contentious legal maneuver. In this paper I tackle these questions and attempt to provide some solutions to alleviate the tension between plaintiffs and Two-Stepping corporations.