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J&J’s Talc Bankruptcy Case Thrown Out by Appeals Court
Key Excerpts from Article on Website of Wall Street Journal
Posted: February 13th, 2023
https://www.wsj.com/articles/j-js-talc-bankruptcy-case-throw...
A federal appeals court in Philadelphia rejected Johnson & Johnson ‘s use of chapter 11 bankruptcy to freeze roughly 40,000 lawsuits linking its talc products to cancer, blunting a strategy the consumer health giant and a handful of other profitable companies have used to sidestep jury trials. The Third U.S. Circuit Court of Appeals on Monday dismissed the chapter 11 case of J&J subsidiary LTL Management LLC, which the company created in 2021 to move the talc injury lawsuits to bankruptcy court and freeze them in place. J&J is now exposed once again to talc-related cancer claims that have cost the company’s consumer business $4.5 billion in recent years and are expected to continue for decades. J&J tried to stanch those costs through an emerging corporate restructuring strategy that offered J&J and other companies the protections of bankruptcy, despite their solvent balance sheets and solid credit ratings, and put a total of more than 250,000 injury lawsuits against the businesses on hold. Monday’s decision marks the first time a federal appeals court has disapproved of the bankruptcy strategy, known in legal circles as the Texas Two-Step. The court’s decision could mark tougher scrutiny of the legal tactic, which would make it harder for big companies to move past potentially costly and time-consuming personal-injury litigation. Bankruptcy allows companies swamped by lawsuits to drive settlements of legal liabilities through a chapter 11 plan and stop litigation from advancing in the civil justice system.
Note: Johnson & Johnson knew that its products caused cancer and lied to the public about it for decades. For more along these lines, see concise summaries of deeply revealing news articles on corporate corruption from reliable major media sources.
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