Johnson & Johnson Considers 3rd Bankruptcy for Talc Litigation

Johnson & Johnson may be filing for bankruptcy for a third time in an attempt to address its talc liabilities, this time under a different corporate structure. The pharmaceutical giant has twice failed at “Texas Two-Step” filings to resolve mass tort litigation against it. Roughly 51,000 lawsuits filed against Johnson & Johnson claim the company’s talc-based products caused them to develop cancer. Johnson & Johnson’s two Chapter 11 bankruptcy filings through its subsidiary, LTL Management, were both denied by a New Jersey judge who found LTL did not qualify for bankruptcy protection because it was not in financial distress.  The Texas Two-Step strategy is when a company facing lawsuits tries to transfer its legal liabilities to a subsidiary and then initiate bankruptcy proceedings for the subsidiary. This allows the company to separate its liabilities from its assets and protects the main company. J&J is now considering moving the talc cases to Texas in a bid for a potential third bankruptcy filing, according to the Wall Street Journal. The news outlet cited unnamed sources “familiar with the company’s planning.” Bloomberg earlier reported the same information. In order to move the filing to a Texas court, Johnson & Johnson would have to involve one of its existing business units located there to establish a venue, according to the news outlet. On a recent earnings call, Johnson & Johnson said that ahead of an...
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