Court Rejects Johnson & Johnson’s Bankruptcy Strategy

Court Rejects Johnson & Johnson’s Bankruptcy Strategy

A court recently struck down Johnson & Johnson’s attempt to avoid thousands of talcum powder lawsuits by filing for bankruptcy. This decision is good news for individuals who allege J&J’s talc-based products gave them cancer. J&J hoped to resolve talcum powder lawsuits in bankruptcy court, but a panel rejected the company’s tactic. The court’s ruling marks a crucial step in allowing talcum powder claims to resume. 

If you were diagnosed with cancer after regularly using Johnson & Johnson’s baby powder or other talc-based products, The Lake Law Firm can help you. Our skilled talcum powder lawyers can support you in seeking the justice you deserve. 

Tens of Thousands of Talcum Powder Lawsuits Filed Against J&J

Lawsuits accuse J&J of failing to warn consumers about the presence of asbestos in its talcum powder products. Asbestos is a cancer-causing mineral that may contaminate talc during the mining process. Talcum powder lawyers argue J&J was aware that some of its talc-based products could have been tainted with asbestos but neglected to inform consumers. Individuals claim to have developed ovarian cancer and mesothelioma after using J&J talcum powder products. By October 2021, Johnson & Johnson faced over 38,000 talcum powder claims. 

Johnson & Johnson Tries Bankruptcy to Escape Talcum Powder Claims

Talcum powder litigation rapidly grew in a short amount of time. After several trials, Johnson & Johnson had paid over $3.5 billion in talcum powder settlements and verdicts. With no signs of lawsuits slowing down, J&J resorted to a controversial bankruptcy tactic called the Texas two-step. In 2021, the company created a subsidiary LTL Management and saddled it with all talcum powder liabilities. Immediately afterward, LTL filed for bankruptcy, pausing all talcum powder lawsuits. 

J&J stated this bankruptcy plan would efficiently resolve talc lawsuits. Yet, talcum powder lawyers and plaintiffs criticized J&J for trying to shield itself from fairly compensating victims. 

Appeals Court Overturns J&J’s Bankruptcy Filing

On January 30, 2023, an appeals court finally rejected J&J’s bankruptcy strategy. The court ruled that J&J did not enter bankruptcy for financial distress. Instead, J&J only pursued the bankruptcy process to protect its brand and cap the amount it would have to pay toward talcum powder victims. Johnson & Johnson is valued at more than $400 billion. But, it initially offered only $2 billion for LTL to resolve talc claims. 

The court noted that LTL Management did not need to enter bankruptcy as it had access to plenty of money through J&J. LTL Management is reportedly worth $61.5 billion, with many profitable products and brands. Therefore, the court determined that there was no valid purpose for the bankruptcy proceedings. 

The Future of Talcum Powder Claims

Johnson & Johnson continues to stand behind the safety of its talc-based products. The company said it filed for bankruptcy in “good faith” and will challenge the ruling. J&J may try to take the bankruptcy case to the Supreme Court, but the court may refuse to hear the case. If J&J fails to salvage its bankruptcy plan, hundreds of new talcum powder lawsuits will likely be filed and receive a schedule for upcoming trials. 

In the meantime, this is a positive development for victims represented by talcum powder lawyers. Individuals with talcum powder lawsuits have waited over a year while J&J attempted to force bankruptcy proceedings. If you used Johnson & Johnson talc-based products and later developed cancer, The Lake Law Firm can help you. Speak with one of our talcum powder lawyers to begin your claim today.