J & J Subsidiary Refiles Chapter 11 Bankruptcy
Johnson & Johnson announced on April 4 that its subsidiary LTL Management LLC (LTL) has re-filed for voluntary Chapter 11 bankruptcy protection to obtain approval of a reorganization plan that they believe will equitably and efficiently resolve all claims arising from cosmetic talc litigation against the Company and its affiliates in North America. To that end, the Company has agreed to contribute up to a present value of $8.9 billion, payable over 25 years, to resolve all the current and future talc claims, which is an increase of $6.9 billion over the $2 billion previously committed in connection with LTL’s initial bankruptcy filing in October 2021. LTL also has secured commitments from over 60,000 current claimants to support a global resolution on these terms.
– Source: Yahoo News
This follows on the heels of the 3rd Circuit Court of Appeals in Philadelphia ruling last Friday that Johnson & Johnson and its subsidiary LTL Management could not delay a court order dismissing the Chapter 11 bankruptcy they initially filed in October of 2021. The reason for dismissing the bankruptcy filing in the first place was that J&J is not facing financial distress, and is therefore not entitled to the bankruptcy protection filed by its subsidiary.
Andy Birchfield, a plaintiffs’ lawyer at law firm Beasley Allen, said on Tuesday that claims “could easily be resolved if Johnson & Johnson would stop playing games and abusing the bankruptcy court process.”
The judge overseeing the case on Tuesday said he planned to dismiss the J&J unit’s bankruptcy as soon as today. That would allow lawsuits and trials to resume in courts across the United States.
Securing widespread agreement among plaintiffs for a settlement could ease the path of J&J’s subsidiary if it files a second bankruptcy. In the first case, litigants resisted settling, balking at the company’s initial $2 billion offer. Court-ordered mediation sessions failed to produce an agreement.
Even with a prearranged settlement, however, a minority of talc plaintiffs could ask the bankruptcy judge to dismiss the Chapter 11 filing yet again, triggering the same hearings and rulings that led the appeals court to invalidate the tactic in the first place.
– Source: Reuters
The J&J Statement
“The Company continues to believe that these claims are specious and lack scientific merit,” said Erik Haas, Worldwide Vice President of Litigation, Johnson & Johnson. “However, as the Bankruptcy Court recognized, resolving these cases in the tort system would take decades and impose significant costs on LTL and the system, with most claimants never receiving any compensation. Resolving this matter through the proposed reorganization plan is both more equitable and more efficient, allows claimants to be compensated in a timely manner, and enables the Company to remain focused on our commitment to profoundly and positively impact health for humanity.