Johnson & Johnson Files for Bankruptcy Protection for Talc Litigation Subsidiary

[Asia Economy Reporter Yuri Kim] U.S. Johnson & Johnson (J&J) has filed for bankruptcy protection for its subsidiary facing billions of dollars in legal liabilities over talc product controversies, Bloomberg reported on the 14th (local time).

LTL Management LLC, a division spun off from Johnson & Johnson responsible for talc-related liabilities, filed for Chapter 11 bankruptcy protection at the Charlotte court in North Carolina on the same day. Johnson & Johnson is expected to halt ongoing lawsuits through this subsidiary’s bankruptcy filing and establish a trust fund to resolve compensation issues.

Johnson & Johnson stated that they believe resolving this issue as quickly and effectively as possible is the best course of action for the company and its shareholders. This approach is intended to address litigation through bankruptcy courts rather than pursuing lawsuits nationwide, a method also used by other companies facing asbestos lawsuits.

Under federal law, all lawsuits are halted upon filing for bankruptcy protection, and the company can establish a trust fund sufficient to cover future claims, allowing victims to receive compensation from the trust fund instead of pursuing litigation.

Victims strongly criticized this as a trick by large corporations to evade lawsuits, calling it the worst kind of corporate fraud.

Johnson & Johnson is currently facing about 35,000 lawsuits related to talc products such as baby powder.

In June, the U.S. Supreme Court rejected the company’s appeal to overturn a lower court ruling ordering $2.12 billion in damages related to a lawsuit filed by 22 women. These women claimed they developed ovarian cancer after using Johnson & Johnson’s baby powder and talc-based cosmetics containing asbestos.

Johnson & Johnson announced in May last year that it would stop selling the controversial baby powder products in the U.S. and Canada but maintains that its talc-based products are safe, having confirmed through thousands of tests that they do not contain asbestos.