Johnson & Johnson talc claimants seek dismissal of latest bankruptcy bid
Wachiwit
Johnson & Johnson's (NYSE:JNJ) latest bankruptcy attempt to settle tens of thousands of cancer lawsuits related to its talc-based baby powder must be dismissed, a group of lawyers representing the claimants argued in a court filing.
LTL Management LLC, a unit JNJ (JNJ) established in 2021 to hold all of its talc liabilities, refiled for Chapter 11 bankruptcy protection last week after its first attempt failed following an appeals court ruling early this year.
The group alleged that JNJ's move to seek bankruptcy protection for LTL was made in bad faith and called on the Judge Michael Kaplan of the US Bankruptcy Court for the District of New Jersey to toss the case.
With the latest bankruptcy strategy, JNJ has agreed to offer $8.9B to settle claims, a significant increase from the $2B the company agreed to pay in its first attempt.
Noting that none of the leading law firms in the multi-district litigation supported JNJ's proposal, the group also questioned JNJ's (JNJ) claim that it has the backing of 60,000 – 70,000 claimants for the move.
The filing further states: "To honor the memory of those victims who have died, to bring justice to the survivors and their families, and to protect the bankruptcy system from fraudulent machinations that erode its integrity, in light of the fraud and sanctionable conduct that permeates LTL's second filing, this case must also be dismissed."
Meanwhile, JNJ (JNJ) maintained that more than 60,000 talc claimants support its bankruptcy plan for LTL Management despite "opposition from a small number of plaintiff law firms."
"We continue to firmly believe the proposed resolution is the most efficient and equitable, and we look forward to following the legal process set by the Bankruptcy Court to present the proposed plan for a vote by all claimants," JNJ's Worldwide Vice President of Litigation, Erik Haas said.
Read: Seeking Alpha contributor The Value Portfolio argues that JNJ's (JNJ) plan to settle the talc-related lawsuits will only hurt its cash flow by 1-2%.
This was corrected on 04/11/2023 at 2:50 PM. This article was amended to change the term "talc victims" to "claimants" over legal implications. It was also amended to correct the latest settlement amount to $8.9B. An earlier version of the article inaccurately mentioned the amount as $8.9M.