Johnson & Johnson Has Moved LTL Management To Texas And Intends to Seek Bankruptcy For A Third Time
The first two attempts at bankruptcy failed because the parent company is not in financial distress as bankruptcy would require
Monday, January 22, 2024 - It is abundantly clear that Johnson & Johnson wants to use the bankruptcy court to settle the tens of thousands of talcum powder lawsuits that have been filed against them accusing the company of failing to warn users of Johnson's Baby Powder that asbestos lurked in the company's talc supply. The pharmaceutical and healthcare conglomerate has moved its LTL management subsidiary to the state of Texas to implement, once again, the Texas Two-Step bankruptcy scheme. Texas bankruptcy law permits companies to assign their mass tort lawsuits to a shell company and then file for bankruptcy of only the shell company. In this case, Johnson & Johnson has already created LTL management to contain the aforementioned legal liabilities and also about 9 billion dollars the company thinks will satisfy at least 75% of the plaintiffs, the number needed to force a settlement. Bloomberg reports: "Johnson & Johnson is seeking to move a unit to Texas as it prepares for a potential third bankruptcy court filing to resolve more than 50,000 lawsuits alleging tainted talc in its baby powder caused cancer. The company filed a request last month with the Texas Secretary of State's office to relocate its LTL Management unit to Austin and rename it ahead of a Chapter 11 filing in the state, according to the Dec. 19 filing and people familiar with the plan."
Some plaintiff lawyers, legal scholars, and federal lawmakers think that Johnson & Johnson, a company with $400 billion in assets, is abusing the bankruptcy law and sheltering their parent company. Others including New Jersey federal bankruptcy judge Michael Kaplan think bankruptcy law will enable the greatest number of plaintiffs the ability to receive a generous lump sum in a timely fashion. And with most of the plaintiffs suffering from ovarian cancer, time is critical for a resolution. Most are willing to forego the "lottery-like" punitive damage awards that may be available as a result of an individual trial. Attorneys know that Johnson & Johnson will benefit from the new and third attempt at bankruptcy as it will put a halt to talcum powder ovarian cancer trials against them that were scheduled to resume this year.
More than 55,000 lawsuits allege that using Johnson's Baby Powder for feminine hygiene causes women to develop and eventually die from talcum powder ovarian cancer. Ovarian cancer is difficult to diagnose as it sometimes masks itself as endometriosis or other female monthly pain and discomfort. If ovarian cancer is not diagnosed in its early stages, women have less than a 5% chance of living more than five years post-diagnosis according to internet medical experts. The nature of ovarian cancer is putting pressure on plaintiffs to settle the case for a greatly depreciated sum. Current estimates are that if the $9 billion offer is accepted, each plaintiff would receive an amount insufficient to cover their medical expenses.
OnderLaw, LLC -