J & J's New Bankruptcy Plan Could Offer Claimants Substantially More Money
Johnson & Johnson is confident that the third attempt at settling current and future talcum powder cancer claims will be successful
Thursday, February 1, 2024 - The company plans to file for bankruptcy for its LTL management, talcum powder cancer liability subsidiary this time in the state of Texas, home to the infamous Texas Two-Step bankruptcy scheme. The bankruptcy maneuver could force Johnson & Johnson to pay billions immediately to claimants to settle all talcum powder cancer and mesothelioma claims. Bloomberg reports, " J&J remains committed to using bankruptcy to address its mass tort asbestos liabilities stemming from allegedly tainted baby powder, despite seeing two prior Chapter 11 filings for its talc unit tossed out of court last year in just six months. Bankruptcy protection allows the company to avoid incurring legal defense costs while negotiating a potential deal that curtails decades of future talc litigation."
The company's previous two attempts at bankruptcy in New Jersey produced mixed results but also provided the company with hope. The first bankruptcy filing was approved but eventually overturned by an appeals court because Johnson & Johnson, with over $400 billion in assets, was anything but imminent financial distress. LTL had a funding agreement with the parent company for $69 billion. The second attempt at bankruptcy was accompanied by a sweetened settlement offer but it too was rejected over the same concerns. More than 55,000 talcum powder lawsuits have been filed and that number again have filed claims certifying their intent to sue bringing the total number of potential claimants to more than 100,000. The initial offer to claimants was $1 billion, but increased to $8.9 billion the second time. The settlement offer was rejected being just short of the needed 75% supermajority of claimants. This time around claimants are making their demands known beforehand. Bloomberg Law News reports that the third bankruptcy attempt is destined to fail unless the settlement offer is increased substantially. A sweetened settlement offer is expected on the heels of last week's $700 million settlement with 42 states which accused the company of illegal marketing practices. One plaintiff attorney who previously worked at a law firm representing J & J told reporters that a deal approaching $19 billion is in the cards. " A lawyer who previously represented J&J against talc litigation proposed a deal in November that would see J&J pay $19 billion to eliminate all its talc liabilities. The offer was met with a chilly reception from J&J, which accused him of wrongfully disclosing privileged information." It is unclear how the bankruptcy court in Texas will deal with the company's same lack of imminent financial distress when deciding on approval. Plaintiff lawyers stressed that they would not approve a bankruptcy settlement offer unless all of their talcum powder cancer and mesothelioma clients suing the company were fairly compensated. "J&J is not going to get us to sign on to any deal--bankruptcy or not--that doesn't fairly compensate victims," Beasley Allen attorney Andy Birchfield said. "I have a hard time envisioning a path where they can pull off an improper and hostile bankruptcy and I don't think J&J is willing to pay reasonable values to the clients so long as it views bankruptcy as an option," according to Bloomberg.
OnderLaw, LLC -