According to seven people familiar with the question, Johnson & Johnson is exploring a plan to offload accountability from the widespread Baby Powder litigation in a new creative business that would then seek bankruptcy protection.
During the discussions on the settlement, some people said that one of the health conglomerate attorneys told plaintiffs’ attorneys that J&J could pursue the bankruptcy plan, which could result in lower payments for cases that are not resolved in advance. The plaintiffs’ attorneys initially would not have been able to stop J&J from taking a similar step, although it could pursue legal action to challenge it later.
Some people said that J&J has not yet decided whether to pursue the bankruptcy plan and may eventually abandon the idea. Reuters could not determine whether J&J hired restructuring lawyers to help the company explore the bankruptcy plan.
J&J has faced lawsuits for dozens of thousands of plaintiffs that its baby powder and other talc-based products contained asbestos e caused cancer. The plaintiffs include women who have ovarian cancer and others battling mesothelioma.
“Johnson & Johnson Consumer Inc. has not decided on some course in particular of action in this dispute in addition to continuing to defend the defend safety of talk and argues these cases in the wrong system, as the trials show in the course, “said sister company J&J that hosts the company’s talc-based products in a statement provided to Reuters. J&J declined further comment.
If J&J were to proceed, plaintiffs who have not settled could find themselves in protracted bankruptcy procedures with probably a much smaller company. Future payments to plaintiffs would be dependent on how J&J decides to finance the entity hosting its talc liabilities.
J&J is now considering using The Texas “divisive merger” law, which allows a company to divide into at least two entities. For J&J, this could create a new entity that houses talcum liabilities which would then be archived for bankruptcy to stop the litigation, some people said.
The maneuver is known among legal experts as a two-step bankruptcy at strategy for other companies facing litigation over asbestos they used in recent years.
J&J could also To explore using another mechanism for filing for bankruptcy besides Texas law, some of the people said.
A 2018 Reuters survey found J&J knew for decades that asbestos, a known carcinogen, was hiding in its baby powder and other talc-based cosmetic products. The company stopped selling talcum powder in the United States and Canada in May 2020, partly because of what he called “misinformation” and “groundless allegations” about the talc product. J&J claims its consumer talc products are safe and confirmed by thousands of tests to be asbestos free.
The blue-chip company, which boasts about $443 billion market value, faces lawsuits from more than 30,000 plaintiffs claiming its talc-based products were unsafe. In June, the US Supreme Court declined to hear the appeal of J&J of a Missouri court ruling that resulted in $ 2 billion of damages assigned to women citing the company’s talc caused their ovarian cancer.
Attorneys for the plaintiffs view the two-step failure strategy as one of the skirts of potentially expensive agreements or judgments. Companies’ view and how ways to kidnap numerous causes legal in one court for efficient negotiations that the bankruptcy law requires for liabilities asbestos. The company outside bankruptcy can reach a financing agreement with the entity facing a judicial restructuring to cover future clearance payments.
In 2017, paper towel maker Brawny Georgia-Pacific used Texas law to move asbestos liability to an entity that subsequently filed for failure in North Carolina.
Bankruptcy cases filed to resolve disputes, including those relating to asbestos, often last for years and rarely fully repay creditors. The manufacturer of OxyContin, Purdue Pharma, for example, will solve thousands of causes for opiates after two years of bankruptcy negotiations with a plan valued at more than $10 billion to tackle trillions of dollars in affirmations.
According to a press release, another company, DBMP, filed for failure last year to resolve responsibility for asbestos and said the case could take up at the age of eight.
J&J also faces litigation that it contributed to the opioid epidemic in the United States and recently recalled spray sunscreen products after discovering some contained low levels of benzene, another carcinogen.
The company in June agreed to pay $263 million to resolve claims about opioids in New York. He denied wrongdoing related to his opioids.
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