On Tuesday, the Johnsons & Johnsons company defended its second attempt to settle talc cases in bankruptcy court by stating to the US judge that it can quickly come to an agreement behind its $8.9 billion settlement offer.
In court, Linda Richenderfer, an attorney for the US, Trustee, the Department of Justice’s bankruptcy watchdog, claimed that Johnson and Johnson (J&J) subsidiary LTL Management had not adequately defended its claim that the deal would be supported by two-thirds of talc plaintiffs, especially in light of opposition from plaintiffs’ attorneys involved in LTL’s first bankruptcy.
Although agreeing with Richenderfer’s worries, Kalpan stated that he would hold off taking any steps to avoid LTL’s second bankruptcy petition until he had more details.
More than 38,000 lawsuits against J&J have been consolidated in federal court in New Jersey over claims that the company’s talc products occasionally contained carcinogenic asbestos.
These lawsuits have been put on hold while LTL works to reach a bankruptcy settlement. According to J$J, its talc powder, including baby powder, are asbestos-and cancer-free.
J&J split its consumer business in half in 2021 and transferred the talc lawsuits to a newly formed subsidiary, which almost immediately filed for Chapter 11. This move was made to put an end to the lawsuit and pressure the plaintiffs into an all-inclusive settlement in bankruptcy court.
After concluding that LTL was not in financial distress, the 3rd US Circuit of Appeals dismissed LTL’s initial bankruptcy proceedings as improper.
According to LTL attorney Greg Gordon at the court hearing on Tuesday, the second bankruptcy is distinct from the first because the company has fewer assets accessible and is more supportive of a bankruptcy settlement.
Gordon referred to that as an over-the-top charge, noting the plaintiffs’ genuine and significant support for the settlement. He said that allowing them to vote on the deal would swiftly ease any concerns.
According to Davi Molton, a representative of the official committee of talc claimants in LTL’s first bankruptcy, the second bankruptcy filing has to be thrown out so that cancer victims can have their day in court.
According to Molton, hundreds of J&J product victims have passed away while waiting for justice to be served. According to Mikal Watts, who represents clients who favor the agreement, the ladies should be given the option to vote on the current agreement.
The lawsuit that is already in federal court as well as those that have not yet been filed would be covered by LTL’s proposed settlement. By May 14 this year, it intends to submit a formal bankruptcy plan.
The American multinational firm Johnson & Johnson (J&J) was established in 1886. It creates consumer packaged goods, pharmaceuticals, and medical equipment. J&J is one of the two US-based businesses with a premier credit rating of AAA and is one of the most valuable companies in the world.
There are many well-known brands of pharmaceuticals and first aid products within Johnson & Johnson’s umbrella. Johnson & Johnson and its affiliates collaborate with the public and private sectors in a range of contexts, including to advance academic financing, philanthropy, event sponsorship, and political lobbying.
Over 35,000 lawsuits have been filed against J&J alleging that its baby powder causes ovarian cancer. This case centers on allegations that asbestos, a known carcinogen, is frequently found in areas where the talc is mixed and reportedly included in the talc-based powder.
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At the beginning of the complaints, the company had paid billions to several victims, mostly women, to keep the reputation of the business. In the following years, the filing against the company increased and the demand for their products in the market started to decline.
Due to the declining demand, J&J declared it will stop selling talc-based baby powder in the US and Canada in 2020, but it would still be available in other countries.
According to a statement from the business, the talc-based baby powder will continue to be sold in stores until it runs out while the company’s cornflour-based baby powder will continue to be sold in the US and Canada.
Using a procedure known as Texas divisional merger, Johnson & Johnson subsidiary LTL Management LLC filed for Chapter 11 bankruptcy in North Carolina in 2021. According to the procedure permitted by Texas law, a business might establish a distinct subsidiary to assume obligations while the current business continues to run properly.
The business declared that it would switch to producing corn flour-based powders by 2023, replacing talc-based powders. According to the business, the talc-based powder is safe for usage and doesn’t contain asbestos.
As more people chrome forward in 2023 to claim that the company’s product caused their cancer, the number of lawsuits involving J&J baby powder has surpassed 40,000. To resolve all pending legal claims against the business, J&J has reportedly offered 9 billion.
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