Plaintiffs lawyers have called the use of bankruptcy as a strategy in multidistrict litigation “blatantly disgusting,” and litigation funders during a recent conversation said they view it dispassionately as a “settlement tool.” A judge will be hearing arguments on the issue this week.

“What defendants want is to resolve all the claims with as little chance as possible of new claims coming back to them,” Stanford Law professor Deborah Hensler told the National Law Journal. Hensler, who teaches complex litigation, mass tort and class action, added that the defense side wants to prevent “thousands of new claimants coming against them forever.” The real issue, however, is the question of the appropriateness of using bankruptcy as a resolution model for mass tort litigation. “What are the limits? I think those are still being worked out,” she said.

The strategy has not only been challenging, but also met doubts in the courts. “I think what we’re currently seeing is courts saying, ‘You can’t do this,’” Hensler said. It’s not as easy as creating a “shell company and then [saying] it’s bankrupt because we’ve put all the liability claims into this new corporation.”