J&J unit offers independent review if it remains bankrupt



A subsidiary of Johnson & Johnson on Friday offered to submit to an independent review of the restructuring undertaken by the healthcare giant in an attempt to settle thousands of lawsuits in US bankruptcy court alleging that J&J baby powder and other talc products cause cancer.

Greg Gordon, an attorney for J&J’s subsidiary, LTL Management LLC, raised in a hearing before U.S. Bankruptcy Judge Michael Kaplan the idea of ​​a court-appointed examiner who could “come in and do the investigation he wants” to determine whether the restructuring was short-term. cancer victims.

Bankruptcy judges have wide discretion over the scope and budget of an appointed examiner. Such a review would depend on whether LTL stays bankrupt, an arrangement the cancer plaintiffs oppose.

The cancer plaintiffs asked Kaplan to dismiss LTL’s bankruptcy filing and allow them to resume legal action against J&J. Kaplan, who presided over a week-long hearing on the matter in Trenton, New Jersey, said he would decide by the end of the month whether to drop the case.

J&J is trying to use LTL’s bankruptcy filing to resolve about 38,000 lawsuits alleging the company’s talc products caused ovarian cancer and mesothelioma, a disease linked to exposure to smog. ‘asbestos. J&J maintains that its talc products are safe and asbestos-free, but LTL’s attorneys have argued that bankruptcy is the only practical way to resolve the sheer volume of lawsuits.

During the hearing’s closing arguments, Gordon offered the option of an independent reviewer to clear things up after lawyers for cancer victims argued bankruptcy was improper.

J&J, which has a stock market value of more than $400 billion, created LTL to take on responsibility for cancer lawsuits in October 2021. LTL filed for bankruptcy a few days later. Cancer plaintiffs called the company’s restructuring and bankruptcy “rotten to the core”.

Legal experts referred to this type of maneuver as a “Texas two-step” maneuver because it exploited a Texas law that allows a company to split in two via a so-called split merger, burdening a company with liabilities while the other takes valuable assets.

Gordon said if a court-ordered investigation uncovers evidence of improper behavior by the company, the talc plaintiffs could sue for restructuring fraud while the bankruptcy case continues.

During the bankruptcy of media company Tribune Co, an examiner found evidence of dishonesty in the media company’s disastrous leveraged buyout in 2007, ultimately leading to a settlement of $200 million in fraud claims in 2019 .

Before Gordon raised the possibility of an examiner, the U.S. Justice Department’s bankruptcy watchdog suggested another alternative path, saying Thursday the court should consider appointing a Chapter 11 trustee to resume operations. from LTL from the J&J Nomination Management Team.

(Reporting by Dietrich Knauth, Tom Hals and Mike Spector; Editing by Will Dunham and Amy Stevens)

The most important insurance news, delivered to your inbox every working day.

Receive the trusted insurance industry newsletter



Source link

Previous Is it too late to save more restaurants from bankruptcy?
Next People living alone, over 50, most likely to file for personal bankruptcy in Seoul