SUMMARY
- Federal bankruptcy judge dismisses LTL Management's (a J&J subsidiary) second attempt to file for bankruptcy protection, stating the company wasn't in immediate financial distress.
- J&J's proposed $8.9 billion settlement to halt new lawsuits hangs in the balance, despite support from over 60,000 claimants.
- J&J intends to appeal the decision, maintaining that its talc products are safe, backed by clinical research and scientific evidence.
In an unexpected turn of events on Friday, a federal bankruptcy judge firmly dismissed Johnson & Johnson's repeated attempts to reconcile the multitude of lawsuits surrounding allegations of cancer caused by their talc baby powder and other related products.
In a strategic move back in 2021, the healthcare giant decided to shift its talc liabilities to a fresh subsidiary named LTL Management, promptly filing for Chapter 11 bankruptcy protections. However, Judge Michael Kaplan from Trenton, New Jersey, expressed in his legal opinion that the second bankruptcy filing of LTL Management must be trashed, attributing his judgement to the fact that the subsidiary wasn't on the brink of immediate or imminent financial collapse. Earlier in April, a U.S. appeals court dismissed the initial bankruptcy attempt on the same grounds.
This judgement endangers J&J's proposed solution—a whopping $8.9 billion settlement aimed to halt any new litigations. It's worth noting that J&J had mentioned over 60,000 claimants were already prepared to vote in favor of this proposition.
Reacting to the verdict, J&J voiced LTL Management's intent to fight the decision with an appeal.
J&J asserted that LTL began its bankruptcy case in good faith, adhering strictly to the Bankruptcy Code. "The Bankruptcy Code does not necessitate a business to be on fire to seek reorganization supported by the vast majority of claimants," stated Erik Haas, J&J's global vice president of litigation. Despite the turmoil, J&J remains confident in the safety of its talc products, basing this belief on scientific research and clinical evidence.
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