J & J Making Plans to Offload Talc Liabilities into Bankruptcy
Nicole Winch | July 27, 2021
According to a Johnson & Johnson legal representative, the company is currently exploring options to offload liabilities from numerous baby powder lawsuits into a newly created company to seek bankruptcy protection.
This strategy would help settle countless claims linking their talc-based products to cancer. There are tens of thousands of plaintiffs which include women battling ovarian cancer and others suffering from mesothelioma.
The possibility of pursuing this chapter 11 bankruptcy plan was discussed with the plaintiffs attorneys while claim negotiations took place in recent weeks.
With this plan in place, cases that do not settle beforehand could receive lower payouts. Initially,
Plaintiffs lawyers will not be able to stop J&J from taking this next step but could eventually challenge it later through other legal avenues.
There were approximately 28,900 lawsuits pending in U.S. courts against J&J as of April of this year. All of these cases blaming the company’s talc-containing powders were the cause of cancer and other serious injuries. The company pulled all of their talc-based products off shelves in the U.S. and Canada last year.
In the most recent quarterly report, J&J revealed that the number of talc cases continues to grow.
For companies facing vast numbers of lawsuits over allegedly defective products, bankruptcy can be a powerful tool. By filing for chapter 11 bankruptcy with the newly created subsidiary, J&J would be able to avoid future lawsuits. Taking this path would also halt ongoing litigation and unsettled claims with victims.
“Johnson & Johnson Consumer Inc. has not decided on any particular course of action in this litigation other than to continue to defend the safety of talc and litigate these cases in the tort system, as the pending trials demonstrate,” according to a company spokesperson.
If J&J does proceed with their proposed plan, victims who have not already settled could find themselves in drawn-out bankruptcy proceedings with a much smaller company. Any future payouts to plaintiffs will be determined based on how the company decides to fund the entity holding its talc liabilities.