U.S. Bankruptcy Judge Michael Kaplan denied Johnson & Johnson’s second bankruptcy attempt in a recent court decision. This decision offers hope to many mesothelioma and ovarian cancer victims seeking justice from Johnson & Johnson. The consumer giant is facing tens of thousands of negligence claims accusing its talc powder product of causing mesothelioma and ovarian cancer.
Sometime back, Johnson & Johnson formed its subsidiary, LTL Management, for the purpose of carrying its talc liabilities into Chapter 11 bankruptcy. When a company is facing mesothelioma or other asbestos-related lawsuits, the company can file for Chapter 11 bankruptcy. Once the bankruptcy filing is approved, the company is required to establish a trust fund and put aside money to compensate people harmed by asbestos. In 2021, LTL Management filed for Chapter 11 bankruptcy and offered $2 billion in settlement for victims and their families. An NJ bankruptcy court approved this first filing, but a higher court reversed the decision citing that the company filed for bankruptcy without any real financial distress, thus, lacked good faith.
Johnson & Johnson did not give up and, through its subsidiary, filed for bankruptcy for the second time. The company offered $8.9 billion in settlement in the second bankruptcy filing for the victims and their families. This is over four times the amount Johnson & Johnson had offered during the first bankruptcy filing. However, despite this and the fact that about 60,000 plaintiffs and some attorneys representing plaintiffs supported the proposed settlement, many more people argued against the move. According to those who do not support Johnson & Johnson’s attempt to declare bankruptcy, allowing Johnson & Johnson to declare bankruptcy would mean that victims and their families will be forced to agree to insufficient terms and will prevent those who may be diagnosed in the future from pursuing justice.