J&J effort to resolve talc lawsuits in bankruptcy fails a second time

 A U.S. judge on Friday shot down Johnson & Johnson's second attempt to resolve tens of thousands of lawsuits over its talc products in bankruptcy, imperiling a proposed $8.9 billion settlement that would stop new lawsuits from being filed.

U.S. Bankruptcy Judge Michael Kaplan in Trenton, New Jersey, ruled that a J&J company's second bankruptcy, like its first, must be dismissed because the talc lawsuits did not put it in immediate "financial distress."

"In sum, this Court smells smoke, but does not see the fire," Kaplan wrote, referring to the J&J unit, LTL. "Therefore, the emphasis on certainty and immediacy of financial distress closes the door of chapter 11 to LTL at this juncture."

J&J said on Friday that it disagreed with Kaplan's decision, and that it would vigorously defend itself against lawsuits that are "specious and lack scientific merit."

J&J's first bankruptcy gambit began in 2021, when it offloaded its talc liabilities into a new company, LTL Management, and immediately placed that company into bankruptcy. LTL's first bankruptcy was dismissed in April after a U.S. appeals court ruled that it was not in sufficient financial distress to be eligible for bankruptcy protection.

LTL quickly filed for bankruptcy again, arguing that its second effort has won more support from plaintiffs for a comprehensive settlement of current and future lawsuits alleging that J&J's baby powder and other talc products sometimes contained asbestos and caused mesothelioma, ovarian cancer and other cancers. J&J has said its talc products are safe and do not contain asbestos.

Attorneys representing cancer victims, along with the U.S. Justice Department's bankruptcy watchdog, had called for LTL's second bankruptcy to be dismissed as an abuse of U.S. bankruptcy law.

https://finance.yahoo.com/news/1-j-j-effort-resolve-204420271.html