Third Circuit Court dismisses J&J’s bankruptcy bid
In a reversal of a New Jersey bankruptcy judge’s ruling, the Third Circuit on Monday dismissed the Chapter 11 bankruptcy case filed by Johnson & Johnson spinoff, LTL Management.
“Good intentions— such as to protect the J&J brand or comprehensively resolve litigation—do not suffice alone,” the opinion said of the debtor’s good faith. “What counts to access the bankruptcy code’s safe harbor is to meet its intended purposes. Only a putative debtor in financial distress can do so. LTL was not. Thus we dismiss its petition.”
- October 2021 – LTL Management LLC is a new entity created by Johnson & Johnson in order to spin off billions in talc liability along with some nominal assets.
- October 14, 2021 LTL files for Chapter 11 bankruptcy in North Carolina court. Talc claimants filed motions to dismiss the case.
- Weeks later, the case was transferred to New Jersey, where J&J is headquartered.
- February 25, 2022 a New Jersey bankruptcy judge allowed the bankruptcy filing by LTL to proceed.
- September 19, 2022 plaintiffs argued in federal appeals court for a reversal of the bankruptcy court’s decision.
- January 30, 2023 Third Circuit issues its ruling dismissing the Chapter 11 case and says “the company was not in financial distress and lacked the required good faith to commence its bankruptcy case.” Law360