A Johnson & Johnson subsidiary is once more requesting that a U.S. judge halt the tens of thousands of lawsuits that have been filed against the company, alleging that its talcum powder and other products cause cancer. This request comes after a federal appeals court ruled that the company’s initial attempt to settle the lawsuits in bankruptcy was improper.
LTL Management will argue that J&J, which has a market value of over $430 billion and has not declared bankruptcy itself, should also be protected by the so-called “automatic stay” under bankruptcy law, which prevents lawsuits against it from moving forward while it is in Chapter 11 proceedings. The hearing will take place on Tuesday in Trenton, New Jersey.
The company’s request for a stay has been contested by two groups of cancer plaintiffs and the U.S. Department of Justice’s bankruptcy watchdog, who claim the move is a ruse to get out of the earlier court order and that the second bankruptcy has “slim to nonexistent prospects” of being successful.
Since LTL initially declared bankruptcy in 2021, more than 38,000 talc cases have been put on hold; however, cancer patients contend that they should be permitted to continue their lawsuits after a federal appeals court rejected the company’s attempt to dump the litigation in bankruptcy.
LTL was declared ineligible for bankruptcy in January by the 3rd U.S. Circuit Court of Appeals in Philadelphia because it was not experiencing “financial distress.”
LTL re-opened the legal dispute over the bankruptcy’s validity by filing for bankruptcy before the talc lawsuits could resume.
LTL contends that the lawsuits must be dropped because further legal action against J&J could jeopardize its efforts to reach a comprehensive settlement of all talc claims, including present and future, in the bankruptcy proceeding. It has claimed that the difference between its second bankruptcy and its first is that it has fewer funds at its disposal and more plaintiff support for a settlement.
J&J has made an $8.9 billion settlement offer, but it has not specified how much would go to each claimant as part of the agreement. The business claims that its talc products, including baby powder, are safe and do not cause cancer.
J&J claims that lawyers who represent 60,000 claimants have agreed to support the current settlement offer. Some plaintiffs’ groups have supported the company’s new bankruptcy.
In October 2021, J&J’s attempt to resolve its talc debt through bankruptcy was launched. The business split its consumer division in half and transferred tens of thousands of talc cases to its newly formed subsidiary, LTL, which swiftly filed for Chapter 11 protection. The objective is to stop the onslaught of litigation and compel plaintiffs to reach a comprehensive settlement.
During LTL’s initial bankruptcy, U.S. Bankruptcy Judge Michael Kaplan consented to shield J&J from lawsuits, stating at the time that bankruptcy offered the best means to equitably handle all of the talc lawsuits concurrently.
In order to offer LTL another chance at a bankruptcy settlement, Kaplan, who is also to preside over the second bankruptcy, will now determine whether to halt the lawsuits once more.
