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Judge Rejects J&J’s Second Bankruptcy Attempt

A judge has rejected J&J’s second bankruptcy attempt in yet another significant development in the ongoing and intense legal drama surrounding talcum powder lawsuits. Pharmaceutical giant Johnson & Johnson finds itself entangled in a web of lawsuits alleging its talc products cause ovarian cancer and mesothelioma. But this high-stakes battle took an unexpected turn when Johnson & Johnson attempted to evade financial responsibility for the mounting claims through not one but two bankruptcy filings. However, the company’s second bankruptcy proposal, involving an $8.9 billion settlement, has failed.  

The Road to J&J’s Latest Bankruptcy Rejection 

Johnson & Johnson’s journey through bankruptcy court began with a controversial bankruptcy plan known as the “Texas Two-Step.” In October 2021, the company shifted its talcum powder liabilities to a newly formed subsidiary known as LTL Management. Subsequently, LTL promptly filed for bankruptcy. This move effectively froze all talcum powder claims and ignited a firestorm of criticism from talc plaintiffs. 

The first Johnson & Johnson bankruptcy sparked outrage among the affected individuals as the proposed settlement amounted to a mere $2 billion. To the delight of talc plaintiffs, an appellate court struck this down in January 2023. The court ruled out settling claims in bankruptcy court on the grounds that J&J was not in financial distress.   

Unfortunately, this relief was short-lived, as J&J made a second bankruptcy attempt on April 4, 2023. The amount offered in this renewed bankruptcy was much higher at $8.9 billion. However, many remained unconvinced about the company’s commitment to equitable compensation. Opponents pointed out that the larger sum failed to genuinely account for the magnitude of the suffering and expenses incurred by the victims.  

Judge Shoots Down J&J’s Second Bankruptcy Attempt  

In another setback to Johnson & Johnson’s defense strategy, U.S. Bankruptcy Judge Michael Kaplan rejected J&J’s second bankruptcy attempt on July 28, 2023.  

Judge Kaplan’s ruling dealt a critical blow to Johnson & Johnson’s hopes of securing a swift resolution to the thousands of claims brought against them. Like the initial bankruptcy, Kaplan reasoned that the talcum powder lawsuits did not impose immediate “financial distress” upon the company. Therefore, this lack of financial crisis rendered J&J’s second bankruptcy attempt inappropriate.  

Johnson & Johnson promptly announced its intention to appeal the ruling. The company expressed that it would continue its efforts to defend itself against what it considers lawsuits that are “specious and lack scientific merit.” The impending appeal promises to keep the legal drama alive, leaving tens of thousands of plaintiffs frustrated over this seemingly never-ending back and forth over bankruptcy court.  

Dueling Arguments in Johnson & Johnson’s Bankruptcy   

J&J maintains that its talc products are safe and devoid of cancer-causing asbestos. The company contends that the proposed $8.9 billion settlement provides a faster and fairer resolution for cancer claimants than the unpredictability of courtroom verdicts. J&J argues that traditional trials can lead to uneven outcomes, where some litigants receive massive awards while others receive nothing.  

Conversely, plaintiffs’ attorneys, supported by the U.S. Justice Department’s bankruptcy watchdog, assert that the second bankruptcy attempt is nothing short of an abuse of U.S. bankruptcy law. Opponents of the bankruptcy ploy challenge that the settlement only creates an illusion of support. They raise concerns that the bankruptcy route infringes upon cancer victims’ rights by forcing the settlement amount on them. Additionally, others worry about this bankruptcy prohibiting future talc victims from filing claims.  

The Fate of Talcum Powder Lawsuits Following J&J’s Failed Second Bankruptcy   

With the rejection of J&J’s second bankruptcy attempt and the company’s inevitable appeal on the horizon, the fate of talcum powder lawsuits remains uncertain. Over 38,000 talcum powder claims filed in the MDL have been in limbo since October 2021. Judge Kaplan did allow one case to go to trial during J&J’s second bankruptcy. This was the first trial J&J faced in nearly two years. The claim involved a 24-year-old California man who claimed exposure to the company’s talc products caused his mesothelioma. The jury awarded the plaintiff $18.8 million.   

Meanwhile, The Lake Law Firm stands ready to support those affected by Johnson & Johnson’s talc products. If you or a loved one developed cancer after using Johnson & Johnson’s products containing talcum powder, you may be eligible for compensation. Call us today at (888) 525-3529 to see if you qualify for a talcum powder lawsuit.