J&J Subsidiary Files for Bankruptcy Again

Legislation & Litigation

Written by Travis Rodgers | Edited By Amy Edel

Red River Talc LLC, a Johnson & Johnson subsidiary, filed a “voluntary prepackaged Chapter 11 bankruptcy case,” according to a company announcement. This is J&J’s third attempt at bankruptcy to settle tens of thousands of talc lawsuits.

The company claims in its announcement, “The Plan constitutes one of the largest settlements ever reached in a mass tort bankruptcy case.” J&J also says legal counsel for the majority of plaintiffs “assisted in the development of and support the Plan.”

The claim was filed in the U.S. Bankruptcy Court for the Southern District of Texas. It’s part of J&J’s plan to use the Texas Two-Step. The strategy involves creating a subsidiary that assumes responsibility for talc litigation and then files for bankruptcy.

This latest filing follows the company’s approximately $8 billion settlement proposal. Plaintiffs then voted on the proposal, which received approval from 83%.

More than 62,000 lawsuits claim the company’s talcum powder and other talc-based products caused cancer. Court documents discuss the link between asbestos-contamination and cancer. In May 2024, the National Institutes of Health released research linking talcum powder to ovarian cancer.

Reaction to the Proposed Bankruptcy

J&J claims in its released announcement, “The Plan affords claimants a far better recovery than they stand to recover at trial. Most ovarian claimants have not recovered and will not recover anything at trial. Indeed, the Company has prevailed in approximately 95% of ovarian cases tried to date, including every ovarian case tried over the last six years.”

The company goes on to claim, “In addition, based on the historical run rate, it would take decades to litigate the remaining cases, and therefore, most claimants will never have ‘their day in court.’”

However, some plaintiffs and their counsel remain opposed to J&J’s bankruptcy and proposed settlement. They plan to ask the court to dismiss or transfer the bankruptcy to New Jersey, where courts have denied J&J’s previous bankruptcy attempts.

According to Reuters, attorney Andy Birchfield says he believes J&J’s settlement and bankruptcy strategy is an abuse of the system. He reportedly commented, “We view this so-called vote as another fraudulent effort by J&J to manipulate the bankruptcy process and minimize the legitimate claims of ovarian cancer victims.”

J&J’s Bankruptcy Plan

U.S. Bankruptcy Judge Michael Kaplan of the District of New Jersey ruled against J&J’s bankruptcy twice in 2023. In his ruling he explained J&J didn’t qualify because it wasn’t in financial distress.

This latest bankruptcy filing only focuses on ovarian cancer cases. J&J said in its statement, “The Plan would resolve 99.75% of all pending talc lawsuits against Johnson & Johnson and its affiliates in the United States. The 0.25% remaining pending talc lawsuits relate to mesothelioma and are being addressed outside of the Plan.”

Previous filings included plaintiffs with mesothelioma. The company has already settled 95% of its mesothelioma lawsuits. J&J also noted, “The Company previously reached settlement agreements to resolve the State consumer protection claims and all talc-related claims against it in the bankruptcy cases filed by suppliers of the Company’s talc (Imerys Talc America, Inc., Cyprus Mines Corporation, and their related parties).” In July 2024, the company proposed paying Cyprus Mines Corporation and Imerys Talc America $505 million.