(Reuters) – Johnson & Johnson is exploring a plan to remove debts from extensive baby powder trials to a newly created company that then seeks bankruptcy protection, according to seven people familiar with the matter.
During settlement discussions, one of the care conglomerate's lawyers has told the complainant's lawyers that J&J can pursue the bankruptcy plan, which could lead to lower payments for cases that are not resolved in advance, some of the people say. The appellant's lawyers would not initially be able to prevent J&J from taking such a step, but could pursue legal action to challenge it later.
J&J has not yet decided whether to proceed with the bankruptcy plan and may eventually abandon the idea, some of the people. sa. Reuters could not determine whether J&J has retained restructuring attorneys to help the company investigate the bankruptcy plan.
J&J is facing legal action from tens of thousands of plaintiffs who claim that its Baby Powder and other talcum products contained asbestos and caused cancer. Complaints include women suffering from ovarian cancer and others struggling with mesothelioma.
"Johnson & Johnson Consumer Inc. has not decided on any specific action in this dispute other than to continue to defend the safety of the talc and correct these cases in the damages system, as the ongoing lawsuits show," says J & J's subsidiary of the company's talc products. in a statement to Reuters. J&J declined further comments.
If J&J were to continue, the plaintiff, who has not decided, could end up in lengthy bankruptcy proceedings with a probably much smaller company. Future payments to the plaintiff would depend on how J&J decides to finance the entity that meets its claims.
J&J is now considering using the Texas "Split Fusion" law, which allows a company to split into at least two entities. For J&J, it could create a new unit that holds talik responsibility that would then file for bankruptcy to stop disputes, some of the people said.
The maneuver is known among legal experts as a two-step bankruptcy in Texas, a strategy of other companies that have faced asbestos disputes in recent years.
J&J could also explore with another mechanism to file for bankruptcy in addition to the Texas law, some of the people said.
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The company, which has a market capitalization of approximately $ 443 billion, is facing legal action from more than 30,000 complainants claiming that its talc products were unsafe. In June, the U.S. Supreme Court refused to try J & J's appeal of a Missouri court decision that resulted in $ 2 billion in damages to women who claimed the company's talk caused their ovarian cancer. epidemic and recently recalled some spray sunscreens after discovering that some of them contained low levels of benzene, another carcinogen.
In June, the company agreed to pay $ 263 million to resolve opioid allegations in New York. It has denied inaccuracies related to its opioids. Catalog