J&J Talc Bankruptcy Filing Contested

J&J Talc Bankruptcy Filing Contested

THE WHAT? Legal representatives of thousands of individuals alleging that Johnson & Johnson’s talc-based products led to their cancer diagnosis have approached a U.S. judge to implement a temporary ban, preventing J&J from placing its talc subsidiary into bankruptcy for the third time.

THE DETAILS J&J’s previous efforts to address the mounting cancer lawsuits through bankruptcy court were unsuccessful twice. Last week, a judge determined that LTL Management, J&J’s talc subsidiary, wasn’t facing the immediate financial crisis required for bankruptcy protection. The call to halt a third bankruptcy attempt for a minimum of 180 days came from the cancer claimants and

THE WHY? The push to prevent further bankruptcy filings by J&J’s talc subsidiary arises from the company’s repeated bankruptcy attempts in the past. J&J’s initial bankruptcy strategy began in 2021 when it transferred its talc-related liabilities to a newly formed company using a corporate process known as the “Texas two-step”, which then was immediately subjected to bankruptcy. However, LTL’s first bankruptcy move was annulled in April after an appeals court deduced it wasn’t in the required financial distress for bankruptcy protection. LTL’s subsequent attempt, built around a proposed $8.9 billion settlement of current and upcoming talc lawsuits, also failed for similar reasons. Judge Kaplan, who rejected LTL’s second bankruptcy, showed reluctance in blocking future attempts but remained open to further discussions before making a final decision next week. The U.S. Department of Justice’s bankruptcy watchdog. J&J’s bankruptcy actions have primarily halted the 38,000 lawsuits against the company, with one case resulting in an $18.8 million verdict in July. In response to these demands, LTL’s lawyer, Greg Gordon, expressed the company’s strong opposition to any efforts to anticipate a potential future bankruptcy before filing.