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In a significant legal move, a subsidiary of Johnson & Johnson has filed for bankruptcy for the third time, aiming to advance an estimated $8 billion settlement to resolve numerous lawsuits claiming that the company’s talc products, including baby powder, are linked to cancer.
The bankruptcy filing was made by J&J's Red River Talc unit in the U.S. Bankruptcy Court for the Southern District of Texas. This action comes amidst over 62,000 lawsuits alleging that J&J's talc products were contaminated with asbestos, leading to various cancers, including ovarian cancer. Johnson & Johnson has consistently denied these allegations, asserting that their products are safe for consumers.
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This latest attempt follows two unsuccessful efforts in federal courts to resolve the ongoing litigation. J&J is employing a controversial strategy known as the “Texas two-step,” which aims to consolidate liabilities through a newly created subsidiary that can declare Chapter 11 bankruptcy. This method allows the company to reorganize its debts and assets under court supervision while potentially enforcing a global settlement that could preemptively stop all related lawsuits.
Importantly, J&J has reportedly garnered support from approximately 83% of current claimants for the proposed bankruptcy plan, exceeding the 75% threshold needed to secure judicial approval. By preemptively obtaining this backing, the company seeks to bolster its chances of successfully navigating the bankruptcy process this time.
The current bankruptcy strategy differs from previous attempts by focusing solely on claims related to ovarian and other gynecological cancers. This pivot builds on J&J's earlier settlements with state attorneys general and individuals who developed mesothelioma, a rare cancer associated with asbestos exposure.
However, J&J’s approach faces significant legal challenges, including a recent U.S. Supreme Court ruling concerning Purdue Pharma's bankruptcy and previous court decisions that dismissed its earlier efforts. Additionally, proposed federal legislation could prevent financially stable companies like J&J from leveraging bankruptcy protections in this manner.
As this situation unfolds, J&J continues to confront a contentious battle with attorneys representing claimants opposed to its bankruptcy maneuver. The outcome of this third bankruptcy effort will be crucial in determining how the company addresses the mounting legal challenges surrounding its talc products.
Keywords for Ranking:
- Johnson & Johnson bankruptcy
- talc product settlement
- cancer lawsuits
- asbestos contamination
- Chapter 11 bankruptcy
- legal challenges J&J
- gynecological cancer claims
- talc liability management
- Texas two-step bankruptcy
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