(Reuters) – Johnson & Johnson’s proposed $8.9 billion settlement of thousands of lawsuits alleging its talc products cause cancer faces a crucial hurdle this week as a U.S. bankruptcy judge in New Jersey considers whether a J&J subsidiary can settle them by file for bankruptcy one second time.
J&J subsidiary LTL Management’s first attempt to do so was rejected in April after a US appeals court ruled it was not in sufficient financial distress to qualify for bankruptcy protection.
LTL quickly filed for bankruptcy again, arguing that its second attempt has won more support from plaintiffs for a sweeping settlement of current and future lawsuits alleging that J&J̵7;s baby powder and other talc products sometimes contained asbestos and caused mesothelioma, ovarian cancer and other cancers. J&J has said its talc products are safe and do not contain asbestos.
Lawyers representing cancer victims, along with the U.S. Justice Department’s bankruptcy watchdog, have called for LTL’s second bankruptcy to be dismissed as an abuse of U.S. bankruptcy law. Cancer victims who oppose the bankruptcy settlement have said the second bankruptcy recycles a failed legal strategy to prevent their cases from being heard by juries.
Starting Tuesday, U.S. Bankruptcy Judge Michael Kaplan in Trenton will hear several days of evidence and arguments before making a decision. Judge Kaplan, whose ruling supporting LTL’s first bankruptcy filing was overturned by the Philadelphia-based 3rd US Circuit Court of Appeals, has said he expects to rule on whether to dismiss LTL’s second bankruptcy in early August.