Johnson & Johnson’s Third Bankruptcy Attempt Denied

For quite some time now, victims of mesothelioma and ovarian cancer and their families have been closely monitoring Johnson & Johnson’s (J&J) repeated legal attempts to escape asbestos liability. Specifically, the giant pharmaceutical company has repeatedly tried to use a controversial bankruptcy strategy. In a significant recent development, a federal bankruptcy judge in Houston, Texas, denied the company’s third attempt to use the bankruptcy strategy as a shield against the tens of thousands of lawsuits it is facing. This decision marked a critical moment in the victims’ quest for justice.

Over 90,000 lawsuits have been filed against J&J, alleging that the giant pharmaceutical company’s baby powder, which was a staple for years, contained asbestos. Asbestos is a naturally occurring mineral that, when inhaled or ingested, can lead to the development of mesothelioma and other severe health issues. Over the years, J&J has maintained that it is innocent and argued that its talcum powder was not asbestos-contaminated. Despite this, numerous jury verdicts have gone against the company, and personal injury as well as wrongful death claims have continued to rise.

To combat these lawsuits, Johnson & Johnson employed a controversial legal strategy called the “Texas Two-Step.” This strategy involves forming a new corporate entity, transferring all liabilities to it, and then having that entity declare bankruptcy. Johnson & Johnson aimed to limit its financial exposure while trying to resolve claims in bankruptcy court instead of through the traditional legal process, which can be quite unpredictable.

However, this approach has faced significant challenges. Johnson & Johnson’s first two bankruptcy filings were already rejected. But this did not stop the company from submitting a third proposal. Their latest proposal, which they filed in a different court, hoping the court would be more favorable, received pushback from victims and the Department of Justice bankruptcy trustee.

The judge presiding over the case ruled against Johnson & Johnson’s third bankruptcy attempt. This time, the settlement offer involved a settlement fund of $8.9 billion to be paid out over 25 years. While some of the victims’ legal representatives supported the deal, many others were against it, arguing that the proposal was pushed through too quickly and without enough victims weighing in on it.

Judge Christopher Lopez sided with the victims’ attorneys, citing “solicitation irregularities,” such as an unreasonably short period for thousands of victims to respond. The judge noted that many victims were not adequately informed or given an opportunity to vote on the proposed agreement. He clarified that the decision was carefully considered, recognizing the case’s complexity and emotional impact.

This ruling means that those affected by Johnson & Johnson’s baby powder can keep seeking justice in court instead of being forced into a hurried settlement that might not adequately represent their suffering, both economically and non-economically.

Nationwide Mesothelioma Lawyers

If you or a loved one were diagnosed with mesothelioma, contact our office to speak to one of our experienced nationwide mesothelioma attorneys about your situation. Our office can help investigate your case and determine if compensation can be sought from negligent parties to help pay for your medical treatment.