J&J Battles Over Staying In Bankruptcy

J&J Battles Over Staying In Bankruptcy

Introduction

LTL Management, a Johnson & Johnson subsidiary, has come to the limelight in the court considering its attempt to use the bankruptcy process for resolving the tens of thousands of talcum powder claims with allegations of causing cancer.

The company is battling to remain in bankruptcy as it finds that it is the only way to get rid of 38,000 claims against their talc-based products, which are alleged of causing mesothelioma. Contrary to the lawsuits, Johnson & Johnson (J&J) states that its talc products are safe for use.

J&J used the "Texas two-step" legal maneuver as a part of their bankruptcy process filing. It allows the companies to split valuable assets from liabilities. The lawyers representing the cancer patients state that the bankruptcy process will only delay the results of the lawsuit and deny justice to the plaintiffs.

According to the lawyers representing the talc plaintiffs, if the bankruptcy plan of J&J gets approved, other big companies might also use the same strategy to deal with facing liabilities. In July 2021, Democratic lawmakers in the House of Representatives proposed a plan to dismiss J&J's bankruptcy maneuver.

New Jersey's Bankruptcy Judge Michael Kaplan has scheduled a five-day trial for considering the bid by committees representing the plaintiffs that will eventually help in dismissing the bankruptcy plan. The judge even indicated to rule the verdict in the case before the end of the month.