J&J's Bankruptcy Move To Deal Talc Suits Fails A Second Time

J&J's Bankruptcy Move To Deal Talc Suits Fails A Second Time

Introduction

Johnson & Johnson's second effort to settle tens of thousands of cases over its talc products in bankruptcy was rejected by a U.S. judge, jeopardizing a proposed $8.9 billion deal that would forbid further lawsuits from being brought.

J&J company's second bankruptcy, along with its first, must be rejected, according to a decision made by > U.S. Bankruptcy in Trenton, New Jersey, since the talc claims did not immediately cause it to experience "financial distress."

With regard to the J&J unit LTL, the court said, "This Court smells smoke but does not see the fire." Since the financial crisis must be certain and immediate, LTL is no longer eligible for chapter 11 at this time.

J&J declared that it would challenge the judge's ruling and that it would tenaciously defend itself from frivolous and unfounded legal claims.

J&J's first bankruptcy gambit started in 2021 when it transferred its talc debts to a new business, LTL Management, and then filed for bankruptcy. A U.S. appeals court determined in April that LTL was not in enough financial difficulty to qualify for bankruptcy protection, and as a result, the company's first bankruptcy was rejected.

Asserting that its second effort has garnered more support from plaintiffs for a thorough settlement of ongoing and upcoming lawsuits alleging that J&J's baby powder and other talc products occasionally contained asbestos and caused mesothelioma, ovarian cancer, and other cancers, LTL swiftly filed for bankruptcy again. According to J&J, its talc products are risk free and asbestos-free.

The second bankruptcy of LTL was criticized as a misuse of American bankruptcy law by lawyers for cancer patients and the bankruptcy watchdog of the U.S. Justice Department.

According to the lawyer for cancer patients, the second bankruptcy was intended to prevent juries from hearing the talc complaints. J&J has been attempting to persuade us that a corporation with a $500 billion market value somehow went bankrupt for the past two years. The lawyer said, "It's time for the nonsense to stop and for J&J to take ownership."

According to J&J, the proposed bankruptcy settlement gives cancer claimants a fairer and quicker conclusion than litigation in other courts. J&J likened recent court cases to a "lottery" in which some plaintiffs win big awards while others lose out completely. It claimed that the sum of the verdicts, settlements, and legal bills linked to the talc had totaled roughly $4.5 billion.

In opposition to the $8.9 billion offer, plaintiffs' attorneys claimed that J&J had created the "illusion" of support by entering into agreements with plaintiffs' attorneys, who swiftly signed up numerous clients without actually bringing any legal action against J&J.

According to attorneys opposed to the transaction, J&J could slam down the settlement terms on cancer patients who were against the deal and stop future lawsuits from being brought by persons who contract cancer as a result of using talc by paying the claims in bankruptcy.

The 38,000 lawsuits that were filed before October 2021 have mostly been put on hold as a result of LTL's bankruptcy procedures. During LTL's second bankruptcy, the jury permitted one case to go to trial, which led to a $18.8 million decision in favor of a California man who claimed he had cancer after coming into contact with J&J baby powder.