Following the deaths of Thomas and Martha Wayne, Liam Distal was inspired to embrace crime and death. Taking advantage of the chaos caused in Gotham by Carmine Falcone, Distal made a new viral infection gang called the Red Hood Gang where any citizen of the city could be a criminal. This brought him into conflict with an unknown vigilante, Bruce Wayne and the Batman. Shortly after the arrival of the Batman, Distal was killed and dumped in a body of lye.
The death of Distal put the Batman to much confusion, as a man posing as him fell into a vat of chemicals who became the Joker was clearly not Red Hood One. Distal could have been killed after switching with the Joker during a plane escape, or have been killed several weeks prior to the arrival of the Batman. Or the body found may not have even been Distal's and Distal became the Joker.