In this photo illustration, a container of Johnson and Johnson baby powder is displayed on April 05, 2023 in San Anselmo, California.
Justin Sullivan | Getty Images
A federal bankruptcy judge on Friday rejected Johnson & Johnson’s second attempt to resolve tens of thousands of lawsuits alleging the company’s talc baby powder and other talc-based products caused cancer.
J&J transferred these talc liabilities into a new subsidiary, LTL Management, in 2021, and immediately filed for Chapter 11 bankruptcy protection.
Judge Michael Kaplan in Trenton, New Jersey, stated in an opinion that LTL Management’s second bankruptcy must be dismissed because the subsidiary was not in “imminent” or “immediate financial distress.” The first bankruptcy attempt was also dismissed by a U.S. appeals court in April for the same reason.
This decision puts J&J’s proposed $8.9 billion settlement in jeopardy, which aims to prevent new lawsuits from emerging. The company claims that over 60,000 claimants have already committed to voting in favor of the settlement.
“LTL initiated its bankruptcy case in compliance with the Bankruptcy Code,” commented J&J in a statement.
Erik Haas, J&J’s worldwide vice president of litigation, stated, “The Bankruptcy Code does not require a business to be engulfed in ‘flames’ to seek a reorganization supported by the vast majority of claimants.”
J&J maintains that research and clinical evidence prove the safety of its talc products.
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