A Johnson & Johnson subsidiary has filed for bankruptcy for the third time in an effort to move forward with an $8 billion proposed settlement to resolve tens of thousands of lawsuits alleging that the company's talc products, including baby powder, caused cancer. The subsidiary, Red River Talc, made the filing in the U.S. Bankruptcy Court for the Southern District of Texas.
J&J is facing lawsuits from over 62,000 claimants who claim that its talc products were contaminated with asbestos and led to various cancers, including ovarian cancer. Despite the allegations, J&J maintains that its products are safe.
After facing setbacks in federal courts, J&J is pursuing a 'Texas two-step' bankruptcy strategy to address the litigation. The company aims to transfer its talc liability to a new subsidiary, which would then file for Chapter 11 bankruptcy, allowing for a reorganization of assets and debts under court supervision.
The proposed bankruptcy plan has garnered support from approximately 83% of current claimants. By consolidating all claims into one settlement through bankruptcy, J&J hopes to put an end to the ongoing legal battles.
J&J's latest bankruptcy effort focuses specifically on ovarian and other gynecological cancer claims, distinguishing it from previous attempts. The company has faced opposition from lawyers challenging its strategy to resolve the litigation through bankruptcy.
Despite progress in garnering support for the proposed deal, J&J's bankruptcy strategy still faces legal obstacles, including recent court decisions and proposed legislation aimed at preventing financially stable companies from utilizing bankruptcy protection for such purposes.
