J&J bankruptcy plan ends talc cancer demand rejection

(Bloomberg) – A federal judge rejected Johnson & Johnson’s third attempt to use bankruptcy to build a billion-dollar trust fund to pay women who claim to use baby powder and other products that allegedly contaminate toxic substances for cancer.

U.S. bankruptcy judge Christopher Lopez dismissed the bankruptcy of a small J&J unit called Red River talc after a two-week trial in Houston on Monday, finding that a vote for cancer victims on the proposal was flawed.

J&J tried for the third time to use a small unit to resolve all talc-related lawsuits involving ovarian cancer and other similar gynecological diseases, rather than facing trials across the country in different courts. The latest trust proposal will set aside $9 billion for victims.

Lopez said the vote for the settlement included violations, which included “unreasonable voting time for thousands of creditors, all at any cost to 75%.

What J&J is trying to achieve in bankruptcy court: QuickTake

Since J&J launched its strategy in 2021, critics complained that the company is one of the most profitable companies in the world and he is trying to use special federal rules that can only be used for bankrupt businesses to protect himself from litigation.

The federal appeals court in Philadelphia dismissed the company’s first two attempts to pay claims through a bankruptcy trust. By moving the case to Texas, the company falls under the jurisdiction of the New Orleans Court of Appeals, which has issued a decision that is more in line with J&J’s legal argument. J&J can now ask the Court of Appeal to review the case.

A company spokesperson did not immediately respond to a request for comment.

While most prominent personal injury lawyers handle thousands of baby milk powder cases tend to deals offered by healthcare giants, a few hope Lopez rejects. The Justice Department’s bankruptcy regulator also objected. Opponents say J&J should not be allowed to use Chapter 11 to resolve the case and question the company’s strategy in providing victims with avant-garde support.

The woman called J&J was sued for selling baby powder and similar products made from talc powder contaminated with cancer asbestos. The company denied that the powder was harmful, but sold baby powder based on talc in the United States in 2020.

At the trial in Houston in February, Lopez was asked to browse the complexities of bankruptcy laws, including whether J&J manipulated the votes of 93,000 claimants on the settlement.

Under the ruling, if a company with asbestos liabilities receives 75% approval from plaintiffs on the bankruptcy settlement plan, the company is allowed to settle all current and future liabilities through a trust.

Under the rejected proposal, J&J’s bankruptcy department will establish a trust to determine how much each cancer victim will receive based on a detailed set of criteria. All lawsuits are related to allegations of causing ovarian cancer and other gynecological diseases, and are settled by the Trust Fund.

For the latest bankruptcy, J&J organized a vote for the claimant before filing the Chapter 11 case. After the company added settlement offers, more and more claimants favored an agreement, providing the company with sufficient support to meet the 75% threshold set by the bankruptcy ordinance.

Red River denied that the vote was flawed and argued that lawyers opposed to bankruptcy settlements motivated the deal because of their own financial interests.

The bankruptcy case is Red River Talc LLC, 24-90505, U.S. Bankruptcy Court in the Southern Texas Region (Houston).

– Assistance with Jef Feeley.

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