U.S. Bankruptcy Judge Michael Kaplan ruled that J&J company’s second bankruptcy must, like its first, be dismissed as the company was not in ‘financial distress’
second attempt to resolve tens of thousands of lawsuits over its talc products in bankruptcy, imperilling a proposed $8.9 billion settlement that would stop new lawsuits from being filed.
J&J’s first bankruptcy gambit began in 2021, when it offloaded its talc liabilities into a new company, LTL Management, and immediately placed that company into bankruptcy. LTL’s first bankruptcy was dismissed in April after a U.S. appeals court ruled that it was not in sufficient financial distress to be eligible for bankruptcy protection.
Attorneys representing cancer victims, along with the U.S. Justice Department’s bankruptcy watchdog, had called for LTL’s second bankruptcy to be dismissed as an abuse of U.S. bankruptcy law. Cancer victims who oppose the bankruptcy settlement argued that the second bankruptcy recycles a failed legal strategy to keep their cases from being heard by juries.
Plaintiffs’ lawyers who opposed the $8.9 billion offer said that J&J had created the “illusion” of support by signing deals with plaintiffs’ lawyers who quickly signed up large numbers of clients without ever filing any lawsuits against J&J.
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