- A federal bankruptcy judge rejected Johnson & Johnson's second attempt to resolve tens of thousands of lawsuits alleging the company's talc products caused cancer.
- J&J in 2021 offloaded those talc liabilities into a new subsidiary, LTL Management, and immediately filed for Chapter 11 bankruptcy protection.
- Judge Michael Kaplan said in an opinion that LTL Management's second bankruptcy must be dismissed because its subsidiary was not in "imminent" or "immediate financial distress."
A federal bankruptcy judge on Friday rejected Johnson & Johnson's second attempt to resolve tens of thousands of lawsuits alleging the company's talc baby powder and other talc-based products caused cancer.
J&J in 2021 offloaded those talc liabilities into a new subsidiary, LTL Management, and immediately filed for Chapter 11 bankruptcy protections.
Judge Michael Kaplan in Trenton, New Jersey, said in an opinion that LTL Management's second bankruptcy must be dismissed because the subsidiary was not in "imminent" or "immediate financial distress." A U.S. appeals court in April dismissed the first bankruptcy attempt over the same reason.
We've got the news you need to know to start your day. Sign up for the First & 4Most morning newsletter — delivered to your inbox daily. Sign up here.
The decision jeopardizes J&J's proposed $8.9 billion settlement that would stop new lawsuits from being filed. The company previously said more than 60,000 claimants have already committed to voting in favor of the plan.
J&J said LTL Management intends to appeal the decision.
"LTL commenced its bankruptcy case in good faith and in strict compliance with the Bankruptcy Code," the company said in a statement.
Money Report
"The Bankruptcy Code does not require a business to be engulfed in 'flames' to seek a reorganization supported by the vast majority of claimants," added Erik Haas, J&J's worldwide vice president of litigation.
J&J contends that research and clinical evidence demonstrates that its talc products remain safe.
