Johnson & Johnson May Not Get Away With Their Bankruptcy Plan Now That It Has Been Moved To New Jersey

A new judge will have to be educated about the pros and cons of Johnson & Johnson's controversial bankruptcy protection scheme

Monday, November 15, 2021 - A North Carolina bankruptcy judge has granted Johnson & Johnson a 60-day reprieve from litigation against their talcum powder businesses while the bankruptcy court moves its venue from North Carolina to New Jersey. Women claim that using Johnson's Baby Powder for feminine hygiene has caused their talcum powder ovarian cancer, a painful, irreversible death sentence. The move is considered a win for the plaintiffs' bar. About a month ago Johnson & Johnson created a shell company called LTL management and transferred its baby powder businesses, both revenue and liability, into it to shelter the $400 billion in cash the company keeps under the parent company's corporate umbrella. The bankruptcy protection move had been approved by the state of North Carolina where the J&J filing originally took place. U.S. Bankruptcy Judge Craig Whitley objected to the filing, thinking that a New Jersey bankruptcy court would be a more appropriate venue given that Johnson & Johnson is domiciled in the state and that multidistrict litigation has been ongoing in the state for the last three years for a number of cases currently about 40,000 and growing by the day.

The controversial bankruptcy protection scheme called the Texas Two-Step has not been approved yet in New Jersey and chances are it will not be. All cases against Johnson & Johnson by plaintiffs accusing Johnson & Johnson of knowingly marketing and selling baby powder that allegedly causes ovarian cancer will be put on hold for 60-days. Talcum powder cancer lawyers will continue to interview prospective clients anticipating that the bankruptcy court will reject the Johnson & Johnson bankruptcy scheme and courts will resume trials. According to the Dallas News, this moratorium includes trials that were nearing a jury verdict. "The move of venue gives critics a new chance to have the strategy thrown out, because federal law in New Jersey may be more favorable to them, Greg Gordon, J&J bankruptcy lawyer who helped develop the strategy, said in court." Experts think that changing venues at this stage will only further delay the bankruptcy court's ability to decide on whether or not the move is acceptable and if it is to come up with a plan. It may also be more costly. "LTL had argued that the case should stay in North Carolina because (judge) Whitley is considered the leading expert on the Texas Two-Step strategy. Gordon said the move may make the bankruptcy last longer and cost more. "It makes me cringe to think of going to another court," where LTL's team will have to start "educating a new judge," Gordon said," according to Dallas News. Johnson & Johnson the parent company, is effectively already enjoying bankruptcy protection from having the current cases against them delayed for another 60-days and possibly more, critics of the plan argue. "Critics say the Texas Two-Step violates the spirit of the Chapter 11 rules because it allows a profitable company to stay outside of bankruptcy, but still enjoy the protection granted by the lawsuit stay," The Dallas paper reported.

Information provided by TalcumPowderCancerLawsuit.com, a website devoted to providing news about talcum powder ovarian cancer lawsuits, as well as medical research and findings.