Avon Files for Bankruptcy Amid Talc Lawsuit Liabilities

Avon Files for Bankruptcy Amid Talc Lawsuit Liabilities

Introduction

After being hit with a $24.4 million verdict in a talcum powder mesothelioma lawsuit, Avon Products, Inc. has declared bankruptcy, citing the financial threat of future talcum powder litigation as the driving factor.

The jury decision, which was delivered just days before the bankruptcy filing, could be just the beginning of a wave of legal liabilities the company might face due to health risks associated with its talcum powder products.

Avon filed for Chapter 11 bankruptcy protection in the U.S. Bankruptcy Court for the District of Delaware, explicitly pointing to "legacy talc liabilities" as the primary reason for the filing. The company, which no longer sells products in the U.S. after divesting its North American business in 2016, still retains the Avon brand in markets outside the United States. These non-U.S. holdings are not included in the bankruptcy proceedings.

The recent lawsuit involved a plaintiff who was diagnosed with pleural mesothelioma in 2023, following exposure to asbestos in Avon talcum powder while working at a manufacturing facility near Chicago in the early 1980s. Mesothelioma, a rare and aggressive cancer that attacks the lining of the chest and lungs, is primarily caused by asbestos exposure. The disease often remains undetected for decades, and by the time it is diagnosed, it is usually at an advanced stage, leaving patients with limited treatment options and a poor prognosis.

Avon’s bankruptcy follows a pattern seen in other companies facing similar litigation. Johnson & Johnson, for instance, has faced tens of thousands of lawsuits alleging that its talcum powder products, including Johnson’s Baby Powder and Shower-to-Shower talc powder, contained asbestos and caused users to develop mesothelioma, ovarian cancer, and other serious health conditions.

Despite its consistent denial of asbestos contamination in its talcum powder, Johnson & Johnson issued a Baby Powder recall in 2019 after tests confirmed the presence of toxic fibers in the product. The company has since transitioned to selling cornstarch-based powders.

Avon’s parent company, Natura & Co., which acquired Avon in 2020, will now purchase Avon’s non-U.S. operations for $125 million. Natura will also provide up to $43 million in financing to sustain the company during the bankruptcy process and facilitate the sale of Avon’s remaining assets. Notably, Natura had already removed talc from Avon products sold in the U.S.

The Avon brand in the U.S. is currently owned by LG Household & Health Care Ltd., which is not involved in the bankruptcy proceedings.

Avon’s bankruptcy filing mirrors the legal strategy employed by other companies, including Johnson & Johnson, that have sought bankruptcy protection to manage the massive legal liabilities associated with talcum powder and potential cancer risks.

Johnson & Johnson, which currently faces an estimated 100,000 Baby Powder and Shower-to-Shower lawsuits, has already been ordered to pay billions of dollars in damages in several cases. While many of these claims involve ovarian cancer, a significant number also involve mesothelioma, underscoring the widespread impact of asbestos-contaminated talcum powder on consumers.