J&J bankrupt talc liabilities
Oct. 14 (Reuters) – Johnson & Johnson (JNJ.N) filed for bankruptcy on Thursday tens of thousands of lawsuits alleging its baby powder and other talcum products caused cancer, offloading liability potential in a newly created subsidiary.
J&J has placed the claims over the talc in an entity called LTL Management LLC, which filed for bankruptcy in North Carolina on Thursday, according to the company and court records. J&J and its affiliates were not part of the bankruptcy filing.
Tens of thousands of plaintiffs have alleged that J & J’s baby powder and other talc-based products contained asbestos and caused cancer, which the company denies. The plaintiffs include women with ovarian cancer and others battling mesothelioma.
J&J executed Thursday’s business reshuffle through a controversial legal move known as two-stage bankruptcy in Texas, a strategy used by other companies facing asbestos-related litigation.
In this process, a J&J company split into two by a so-called divisional merger under Texas law. The transaction created LTL, the new entity grappling with J & J’s talc liabilities, according to court documents filed Thursday.
J&J, with a market value of over $ 400 billion, said the talc business would be halted while LTL filed for bankruptcy.
The company’s costs to defend nearly 40,000 cases have approached $ 1 billion, according to files filed in bankruptcy court Thursday. The settlements and verdicts cost J&J an additional $ 3.5 billion.
“We are taking these steps to provide certainty for all parties involved in the cosmetic talc cases,” J&J General Counsel Michael Ullmann said in a statement.
“While we continue to be a strong advocate for the safety of our talcum cosmetic products, we believe that resolving this issue as quickly and efficiently as possible is in the best interest of (the company) and all stakeholders,” Ullmann added.
Lawyers for the plaintiffs decried the bankruptcy filing. The “J&J bankruptcy gimmick is as despicable as it is brazen” and “an unreasonable abuse of the legal system,” Linda Lipsen, executive director of the American Association for Justice, a group of litigators, said in a statement.
J&J said it would fund LTL’s legal fees for the talc cases in an amount later determined by a bankruptcy judge, with an initial advance of $ 2 billion. LTL has also received certain sources of royalty income with a current value of over $ 350 million to help with potential legal fees, J&J said.
Reuters first reported in July that J&J was considering discharging its talcum obligations and filing them for bankruptcy.
Thursday’s ruling moved J&J’s high-stakes talc safety litigation from courtrooms across the United States to legal proceedings before a federal bankruptcy judge that could potentially force a settlement between the premier company. order and complainants.
In previous settlement discussions, a lawyer for J&J told plaintiffs’ attorneys the company could pursue the bankruptcy plan, which could lead to lower payments for cases that are not settled in advance. , Reuters previously reported.
In the weeks leading up to Thursday’s bankruptcy filing, lawyers representing women with cancer called on several judges to bar J&J from carrying out such a maneuver, but they were dismissed.
The company has argued in statements and in court proceedings over the summer that it has not decided whether or not to continue with the maneuver.
A Reuters investigation in 2018 found that J&J had known for decades that asbestos, a known carcinogen, was lurking in its baby powder and other talc-based cosmetics. The company stopped selling baby powder in the United States and Canada in May 2020, in part because of what it called “misinformation” and “unfounded claims” about the product. talc.
J&J maintains that its talcum-based consumer products are safe and confirmed by thousands of tests to be asbestos-free.
In bankruptcy court documents, lawyers for the newly formed J&J subsidiary said the Chapter 11 filing was “necessary by a relentless assault on the plaintiff’s bar, based on false claims that talc products contain asbestos and cause cancer “.
In June, the United States Supreme Court refused to hear J&J’s appeal against a Missouri court ruling that resulted in the award of $ 2 billion in damages to women alleging that talcum powder in l company had caused their ovarian cancer.
J&J has prevailed in other recent talc cases.
Reporting by Mike Spector in New York and Dan Levine in San Francisco; Additional reporting by Amruta Khandekar and Nate Raymond in Boston; Editing by Peter Cooney and Cynthia Osterman
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