The controversial Johnson & Johnson bankruptcy strategy that’s drawn the ire of Congress faces a fresh trial this week, with the consumer products giant arguing that settling billions of dollars of talc liabilities in a single case is better for cancer victims than fighting thousands of individual claims.
J&J begins a week-long court hearing Monday to decide whether it wrongly manipulated the bankruptcy system by putting a unit into Chapter 11 solely to force a negotiated end to more than 38,000 lawsuits. The case has come under fire from advocates for people harmed by corporate malfeasance and in Congress, where legislation is being considered that would ban the company’s tactics.
“This model of Chapter 11 cannot be what Congress had in mind when it enacted” the federal bankruptcy code, bankruptcy attorney Laura Davis Jones told the judge overseeing the hearing as it began in Trenton, New Jersey, a 25-mile drive from J&J’s corporate headquarters in New Brunswick.
