A subsidiary created by Johnson & Johnson to hold claims related to its talc-based products filed for bankruptcy on Thursday in an attempt to deal with tens of thousands lawsuits alleging the products are linked to cancer.
The Johnson & Johnson affiliate, LTL Management LLC, filed for Chapter 11 bankruptcy protection in the U.S. Bankruptcy Court in Charlotte, N.C., with at most $10 billion in assets and $10 billion in liabilities, according to court documents. Johnson & Johnson itself did not file for bankruptcy.
The company committed to supply LTL Management with money to pay for the amounts “the Bankruptcy Court determines are owed” and will establish a $2 billion trust for that funding. The subsidiary has also been given certain royalty revenue streams for future expenses.
The filing marks a new stage of the legal battle over whether Johnson & Johnson’s baby powder and its talc ingredient led to people developing illnesses such as ovarian cancer and asbestos poisoning.
Johnson & Johnson announced the move in a press release, saying it aims to resolve claims associated with its talc-based products “in a manner that is equitable to all parties, including any current and future claimants.”
Michael Ullmann, Johnson & Johnson’s executive vice president and general counsel, said the company is “taking these actions to bring certainty to all parties involved.”
“While we continue to stand firmly behind the safety of our cosmetic talc products, we believe resolving this matter as quickly and efficiently as possible is in the best interests of the Company and all stakeholders,” he said in a statement.
The company said the filing was “not a concession of liability but rather a means to achieve an equitable and efficient resolution of the claims raised in the cosmetic talc litigation.”
But Andy Birchfield, an injury lawyer at the Beasley Allen Law Firm, which has sued Johnson & Johnson, said the company’s move “stinks” and compared it to bankruptcy filings by Purdue Pharma for opioid claims and the Boy Scouts of America for sexual abuse cases.
“They claim their product is safe and then attempt to hide behind bankruptcy,” he said in a statement. “J&J can run but it can’t hide.
Johnson & Johnson stopped selling its talc-based baby powder products in the U.S. and Canada last year amid the ongoing legal battles.
The company has experienced wins in talc-related cases, but other legal battles haven’t gone its way. Last year, a Missouri appeals court ordered Johnson & Johnson to pay $2.1 billion to women who claimed the products caused their ovarian cancer.
Throughout the legal process, LTL Management said the company has spent almost $1 billion in five years, with settlements and verdicts costing another $3.5 billion. The subsidiary said in a briefing that such costs would be “unsustainable” if litigation continued over decades.