Court Rejects J&J’s Talc Bankruptcy

A federal appellate court rejected Johnson & Johnson’s attempt to shed its baby powder liabilities by transferring them to a subsidiary and placing that subsidiary in bankruptcy.

According to news sources, J&J now faces some 38,000 lawsuits from people and their survivors claiming that the company’s talc-based powder caused cancer — an allegation that J&J has repeatedly denied. The Third Circuit Court of Appeals ruled recently that LTL Management — the subsidiary J&J created for the purposes of housing the liabilities and filing for bankruptcy — is not eligible for Chapter 11 bankruptcy protection.

That means J&J will have to find an alternative way to deal with its liabilities — which may total in the billions of dollars — unless this ruling is reversed by the Supreme Court. The plan was controversial because it would have protected the bulk of the financially healthy J&J’s corporate assets from the legal claims. Critics said the company can afford to pay off alleged victims.

“Only a putative debtor in financial distress can” get bankruptcy protection, the court ruled. “LTL was not. Thus we dismiss its petition.” J&J said in a statement that it will appeal the ruling, rejecting the Third Court’s contention that the company did not file the case in good faith.

“As we have said from the beginning of this process, resolving this matter as quickly and efficiently as possible is in the best interests of claimants and all stakeholders,” J&J said. “We continue to stand behind the safety of Johnson’s Baby Powder, which is safe, does not contain asbestos and does not cause cancer.”

So now it’s game on for 38,000 lawsuits or one big class action—or a Supreme Court intervention. But it’s no surprise because legal disputes are EVERYWHERE! And when those things negatively impact YOU and/or YOUR business including bankruptcies, landlord/tenant matters including unlawful detainers, contract issues, nuisance ADA claims and even collections, call in your good guy business litigator, Dean Sperling to resolve YOUR matter with YOUR best interests in mind! 

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