J&J’s Talc Bankruptcy Case Thrown Out by Appeals Court

Appeals court says J&J talc subsidiary can’t pull cancer claims into bankruptcy because it has the resources to pay and isn’t distressed.

Johnson & Johnson has said it would stop selling talc-based baby powder worldwide after cancer lawsuits.

By Jonathan Randles & Peter Loftus (https://www.wsj.com)

*Link to full article: https://archive.is/TL2Nb

A federal appeals court in Philadelphia rejected Johnson & Johnson ‘s use of chapter 11 bankruptcy to freeze roughly 40,000 lawsuits linking its talc products to cancer, blunting a strategy the consumer health giant and a handful of other profitable companies have used to sidestep jury trials.

The Third U.S. Circuit Court of Appeals on Monday dismissed the chapter 11 case of J&J subsidiary LTL Management LLC, which the company created in 2021 to move the talc injury lawsuits to bankruptcy court and freeze them in place. J&J is now exposed once again to talc-related cancer claims that have cost the company’s consumer business $4.5 billion in recent years and are expected to continue for decades.

J&J tried to stanch those costs through an emerging corporate restructuring strategy that offered J&J and other companies the protections of bankruptcy, despite their solvent balance sheets and solid credit ratings, and put a total of more than 250,000 injury lawsuits against the businesses on hold. Monday’s decision marks the first time a federal appeals court has disapproved of the bankruptcy strategy, known in legal circles as the Texas Two-Step.

A Johnson & Johnson spokeswoman said the company would challenge Monday’s ruling and that it put its subsidiary LTL into bankruptcy to equitably resolve the talc litigation for current and future injury claimants.

[READ MORE]

*RELATED: “J&J Can’t Use Bankruptcy to End Cancer Suits Over Baby Powder, Court Says”:

https://finance.yahoo.com/news/j-j-t-bankruptcy-end-165835182.html