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J&J Mulls Putting Talc Liabilities Into Bankruptcy
- By The Financial District
- Jul 19, 2021
- 2 min read
Johnson & Johnson is exploring a plan to offload liabilities from widespread Baby Powder litigation into a newly-created business that would then seek bankruptcy protection, according to seven people familiar with the matter, Mike Spector, Jessica Dinapoli and Dan Levine reported for Reuters.
During settlement discussions, one of the healthcare conglomerate’s attorneys has told plaintiffs’ lawyers that J&J could pursue the bankruptcy plan, which could result in lower payouts for cases that do not settle beforehand, some of the people said.
Plaintiffs’ lawyers would initially be unable to stop J&J from taking such a step, though they could pursue legal avenues to challenge it later.
J&J has not yet decided whether to pursue the bankruptcy plan and could ultimately abandon the idea, some of the people said. Reuters could not determine whether J&J has retained restructuring lawyers to help the company explore the bankruptcy plan.
J&J faces legal actions from tens of thousands of plaintiffs alleging its Baby Powder and other talc products contained asbestos and caused cancer. The plaintiffs include women suffering from ovarian cancer and others battling mesothelioma.
A 2018 Reuters investigation found J&J knew for decades that asbestos, a known carcinogen, lurked in its Baby Powder and other cosmetic talc products. The company stopped selling Baby Powder in the US and Canada in May 2020, in part due to what it called “misinformation” and “unfounded allegations” about the talc-based product.
J&J maintains its consumer talc products are safe and confirmed through thousands of tests to be asbestos-free.
The blue-chip company, which boasts a roughly $443 billion market value, faces legal actions from more than 30,000 plaintiffs alleging its talc products were unsafe.
In June, the U.S. Supreme Court declined to hear J&J’s appeal of a Missouri court ruling that resulted in $2 billion of damages awarded to women alleging the company’s talc caused their ovarian cancer.
