J&J talc unit given green light to file for bankruptcy

By Becky Bargh 25-Feb-2022

Plaintiffs were unsuccessful in their bid to stop the personal care giant from filing for bankruptcy protection, which could result in lower payouts for talc litigation

J&J is currently facing 38,000 cancer lawsuits against its talc products

Personal care giant Johnson & Johnson (J&J) has won its court battle to file for Chapter 11 bankruptcy.

A New Jersey judge ruled that the proceedings had been filed in good faith and a valid bankruptcy purpose, according to Law 360.

LTL Management, a newly created subsidiary of J&J to hold and manage millions of dollars worth of talc litigation against J&J, made the application for bankruptcy protection in October 2021.

The decision, however, was met with fierce opposition from claimants.

Motions were filed against J&J’s application, accusing it of trying to offload thousands of lawsuits that claim its Baby Powder talc product contained cancer-causing asbestos.

The legal move, known as a Texas two-step bankruptcy – whereby a business is split into two via a divisional merger – could result in lower payouts for plaintiffs that are not settled ahead of the filing.

J&J is currently facing 38,000 cancer lawsuits, and has always denied that its talc products have contributed to any diagnosis.

As a result, the American multinational was forced to fight through the courts for its right to file for bankruptcy.

“Let’s be clear, the filing of a Chapter 11 case with the expressed aim of addressing the present and future liabilities associated with ongoing global personal injury claims to preserve corporate value is unquestionably a proper purpose under the Bankruptcy Code,” wrote Judge Kaplan.

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During the trial, J&J said that it was dealing with billions of dollars of legal costs to cope with the thousands of talc injury claims, as well as potential liabilities.

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