BREAKING: Johnson & Johnson Bankruptcy Plan Rejected Again

For the second time, Johnson & Johnson’s effort to avoid facing talc and asbestos lawsuits in the courtroom was denied – putting the company in a tenuous position as it faces tens of thousands of lawsuits related to the company’s talc Baby Powder and alleged asbestos exposure.

Johnson & Johnson’s $8.9 billion bankruptcy settlement pitch was denied and the case dismissed by Judge Michael Kaplan of the U.S. Bankruptcy Court for the District of New Jersey. According to a court filing, he said the lawsuits did not put Johnson & Johnson in “imminent or immediate financial distress.” The $8.9 billion offered by Johnson & Johnson was to settle all pending and future lawsuits related to the company’s now-defunct talc-based Baby Powder.

According to the New York Times, the company faces approximately 60,000 cases involving consumers who used this or another talc product on themselves, their child or another family member and later developed cancer or another health issue. Johnson & Johnson Baby Powder – and other talcum powder products such as Johnson & Johnson Shower-to-Shower body powder – can be contaminated with asbestos, which is the only cause of the rare and aggressive cancer called mesothelioma.

Many of the pending lawsuits against Johnson & Johnson for the company’s Baby Powder involve patients with mesothelioma – or families of someone who died from this aggressive cancer. There were approximately 38,000 lawsuits paused when Johnson & Johnson started the bankruptcy proceedings approximately two years ago.

Those pending lawsuits may now be allowed to proceed – and Johnson & Johnson might be forced to face these victims in court and compensate them fairly for causing their cancer.

“This is an encouraging ruling,” said Angela C. Bullock, a mesothelioma attorney at Bullock Campbell Bullock & Harris, PC. “Far too many times, courts have rubber-stamped financially healthy, large corporations’ bankruptcy filings with not enough showing of the requisite ‘financial distress’ they would be but for the bankruptcy protection they seek. The fight for our real victim clients is far from over, but I’m hopeful that with this now second dismissal of J&J’s bankruptcy case, the tide is turning and judges are taking harder looks at these filings and that the big corporations’ ‘Texas Two-Step’ scheme is dead.”

 

Asbestos in Johnson & Johnson Baby Powder

Talc is a naturally occurring mineral found in the earth’s soil, and for decades, it was the primary ingredient behind Johnson & Johnson’s Baby Powder. Talc is capable of absorbing moisture, which can keep skin dry and healthy.

Talc made Johnson & Johnson’s Baby Powder a popular item at grocery stores and elsewhere for mothers to use on their children – or adults to use on their own skin.

However, asbestos is also a naturally occurring mineral found in the earth. Asbestos and talc often cohabitate the same areas, which means any mining for talc can inadvertently collect asbestos.

When talc is manufactured for baby powder or other cosmetics, it is ground into a powder. This powder can include trace levels of asbestos fibers, which are sharp and capable of puncturing cell linings in the body. This explains how asbestos contaminates Johnson & Johnson Baby Powder and can cause a health risk for consumers.

 

Background of Johnson & Johnson’s Bankruptcy Efforts

After years of lawsuits popping up against Johnson & Johnson regarding asbestos exposure, Reuters published an article in 2018 that covered the company’s link to the deadly mineral. Following the article, investigations began into the company’s Baby Powder. Tests even found traces of asbestos in the talc, leading to a recall of 33,000 bottles of the product.

In 2020, Johnson & Johnson announced it would no longer manufacture, promote, or sell the talc-based Baby Powder in the United States and Canada. The company stopped manufacturing the talc version of the product worldwide in 2022. Johnson & Johnson announced cornstarch-based brand of baby powder as a safe alternative to using talc as the primary ingredient.

Johnson & Johnson has been trying for a couple of years to offload its talc and asbestos liabilities on a bankrupt subsidiary, LTL Management. Johnson & Johnson created this subsidiary in 2021 for the explicit purpose of shouldering all legal liabilities related to the company’s talc-based Baby Powder. LTL Management would then file for bankruptcy to no longer be an “active defendant,” meaning it could not be the subject of a lawsuit.

This plan is a Chapter 11 bankruptcy tactic used by asbestos manufacturing companies for decades to avoid facing multi-million-dollar lawsuits. Another term for the tactic is the “Texas Two-Step.” Johnson & Johnson’s attempt to employ this legal maneuver again brought to light the ethics of such a tactic.

LTL Management originally set aside $2 billion for bankruptcy settlements but was rejected by the U.S. Court of Appeals for the Third Circuit in Philadelphia. The proposal for $8.9 billion, the second attempt, was filed hours after the first one was rebuffed.

Mesothelioma patients spoke out against the bankruptcy plan. Lawyers representing these victims called it “the largest intentional fraudulent transfer in United States history.”

According to Reuters, plaintiffs with pending cases against Johnson & Johnson requested a six-month ban on any future bankruptcy filings for LTL Management, but a judge later denied this request, which allows Johnson & Johnson to make a third attempt at filing its subsidiary for bankruptcy.

 

Latest Mesothelioma Verdict Against Johnson & Johnson

One lawsuit against Johnson & Johnson was recently allowed to proceed while the xxxxx deliberated on the bankruptcy proposal. A man diagnosed with pericardial mesothelioma – one of the rarest types of cancer – was awarded a verdict of $18.8 million in a case against the company, which will likely appeal the decision.

Pericardial mesothelioma forms in the lining around the heart. The other two types of mesothelioma – pleural mesothelioma and peritoneal mesothelioma, which are more often the cancers caused by Johnson & Johnson Baby Powder – form in the linings of the lungs and abdominal cavity, respectively.

If you have mesothelioma and used Johnson & Johnson Baby Powder in the past – or your mother used it when you were a child – you might be entitled to compensation. There have been many multi-million-dollar verdicts against Johnson & Johnson and awarded to mesothelioma victims.

Our lead patient advocate, Karen Ritter, can help get answers to your questions. Email her at karen@mesotheliomaguide.com for immediate assistance.