Johnson & Johnson Could Put All Talc Liabilities into a Separate Company

Talcum Powder | Goldberg, Persky, and White P.C.

Johnson & Johnson Could Put All Talc Liabilities into a Separate Company

Johnson & Johnson (J&J) is looking to put all its liability from its baby powder litigation into a new business to then file for bankruptcy protection. This would allow lower payments for cases that do not settle beforehand. There is a chance that plaintiffs’ lawyers might not be able to stop this, but they could challenge this after it is complete. Johnson & Johnson is still looking into the idea and could potentially give it up before following through. J&J has many lawsuits from tens of thousands of plaintiffs claiming their baby powder contained asbestos, leading to ovarian cancer and mesothelioma.

J&J is still trying to defend its talc products claiming they are completely safe. It denies any wrongdoing and is continuing to claim there is no issue with its products.  If the company goes through with its plan, plaintiffs that do not settle could end up in protracted bankruptcy proceedings with a smaller company (created by Johnson & Johnson). Johnson & Johnson would also be able to control future payouts by selectively funding the spin off company that has all its liabilities. It would be using Texas’s “divisive merger” law, which allows companies to split into two entities. All talc liabilities would go to the separate entity that could then file for bankruptcy, preventing litigation. Other companies have used this method in the past to avoid asbestos litigation.

It was revealed in 2018 that Johnson & Johnson knew that asbestos was in its talc products. The company still claims the products are safe, but in May 2020 it stopped selling talc-based baby powder in the United States and Canada. J&J unsuccessfully tried to appeal a court ruling that made the company pay $2 billion in damages to women claiming their use of baby powder gave them ovarian cancer. If Johnson & Johnson is successful, it could have a funding agreement with the court, allowing it to restructure future payments.

It takes many years to resolve bankruptcy cases. Purdue Pharma, the maker of Oxycontin, is settling thousands of lawsuits after two years and only must pay $10 billion with trillions of dollars in claims. A different asbestos company filed for bankruptcy last year and it could take eight years for the case to play out. J&J is also being sued for its part in the opioid epidemic, agreeing to pay $263 million to resolve the claims in New York.

Were you exposed to asbestos? Contact us today to see if you could be entitled to compensation. Call 412-471-3980 or fill out our contact form and we will get back to you.

Source:
“J&J exploring putting talc liabilities into new business that would file for bankruptcy, sources say” CNBC (July 18, 2021). [Link]
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