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J&J Takes Spun-off Powder Unit into Chapter 11

22.10.2021 - As expected, Johnson & Johnson is taking its spun-off baby powder business into bankruptcy as a means of sidestepping a steadily moving avalanche of lawsuits claiming that its talc-based powder causes cancer, alternatively that it contains asbestos.

LTL Management, a newly created independent subsidiary of the largest healthcare group in the US, was established to hold and manage claims in the cosmetic talc litigation, and this week announced it had filed for voluntary Chapter 11 bankruptcy protection.

J&J said the filing is intended to “resolve all claims related to cosmetic talc in a manner that is equitable to all parties, including any current and future claimants.” The main company, Johnson & Johnson, and its other affiliates did not file for bankruptcy protection and will continue to operate their businesses as usual,” the filing stressed.

Rumors that the company would take this path first emerged in July this year, when – citing unnamed sources – Reuters reported that an attorney for the new Jersey-based US group had told plaintiffs’ lawyers it might carve out the baby powder activities and seek bankruptcy protection. This, the sources explained, could result in lower payouts for those who had not already settled. At the time, J&J said a decision had not been made.

Lawyers representing more than 30,000 women who have brought claims say they will fight the company’s action, with one attorney saying it seemed hypocritical that a prominent company could defend a product it claims to be safe, while seeking bankruptcy protection for marketing that same product it knew to be dangerous.

In a statement, Michael Ullmann, executive vice President, General Counsel of Johnson & Johnson, said that while the powder manufacturer continues to stand firmly behind the safety of its products, it believes that resolving the matter as quickly and efficiently as possible is in the best interests of all. J&J has established a $2 billion trust for LTL and created “revenue streams” valued at more than $350 million to cover for potential costs.”

Lawsuits against Johnson & Johnson charging that the iconic baby powder caused the plaintiffs’ mesothelioma and ovarian cancer began piling up in 2017. Since then, the value of the litigation has increased steadily. In May this year, the US Supreme Court declined to hear the company’s complaint that a $2.11 billion jury verdict in a case brought by women who developed ovarian cancer from the baby powder was “unfair.”

Author: Dede Williams, Freelance Journalist

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