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.
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.
