J&J considers refiling talc-liability bankruptcy
- Johnson & Johnson is exploring the idea of placing a subsidiary shouldering tens of thousands of talc lawsuits into bankruptcy proceedings for a second time, despite a January federal appeals court decision invalidating the so-called Texas two-step legal maneuver, according to a court filing and four people familiar with the matter.
LTL initially proposed to pay $2 billion to settle the litigation and possibly more. J&J agreed to fund any settlement a bankruptcy court eventually approved. J&J and its subsidiary have argued the bankruptcy served a greater good for all parties, including plaintiffs: The restructuring could deliver settlement payouts more fairly, efficiently and equitably than a “lottery” offered by trial courts, where some litigants get large awards and others get nothing.
The appeals court at the end of March denied the J&J subsidiary’s bid to delay the ruling from taking effect while it seeks a review from the U.S. Supreme Court. The appeals court also previously denied the J&J subsidiary’s request to reconsider its decision. Securing widespread agreement among plaintiffs for a settlement could ease the path of J&J’s subsidiary if it files a second bankruptcy. In the first case, litigants resisted settling, balking at the company’s initial $2 billion offer. Court-ordered mediation sessions failed to produce an agreement.
Such rules typically apply to firms seeking to transfer assets out of a company just before filing for bankruptcy, to put them out of the reach of creditors. In the case of J&J, however, transferring all the lawsuits to another company — one without money to compensate plaintiffs — could run afoul of the same rules.
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