In this photo illustration, a container of Johnson and Johnson baby powder is displayed on April 05, 2023 in San Anselmo, California.
Justin Sullivan | Getty Images
A federal bankruptcy judge on Friday rejected Johnson & Johnson‘s second attempt to resolve tens of thousands of lawsuits alleging the company’s talc baby powder and other talc-based products caused cancer.
J&J in 2021 offloaded those talc liabilities into a new subsidiary, LTL Management, and immediately filed for Chapter 11 bankruptcy protections.
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Judge Michael Kaplan in Trenton, New Jersey, said in an opinion that LTL Management’s second bankruptcy must be dismissed because the subsidiary was not in “imminent” or “immediate financial distress.” A U.S. appeals court in April dismissed the first bankruptcy attempt over the same reason.
The decision jeopardizes J&J’s proposed $8.9 billion settlement that would stop new lawsuits from being filed. The company previously said more than 60,000 claimants have already committed to voting in favor of the plan.
J&J said LTL Management intends to appeal the decision.
“LTL commenced its bankruptcy case in good faith and in strict compliance with the Bankruptcy Code,” the company said in a statement.
“The Bankruptcy Code does not require a business to be engulfed in ‘flames’ to seek a reorganization supported by the vast majority of claimants,” added Erik Haas, J&J’s worldwide vice president of litigation.
J&J contends that research and clinical evidence demonstrates that its talc products remain safe.