Johnson & Johnson Attempts Third 'Texas Two-Step' Bankruptcy to Settle $6.48 Billion Talc Lawsuits

Jul 8, 2024, 07:00 PM

Johnson & Johnson is making a third attempt to use a 'Texas two-step' bankruptcy maneuver to resolve tens of thousands of lawsuits alleging its Baby Powder and other talc products caused cancer. The company maintains that its talc is safe, asbestos-free, and does not cause cancer. J&J has proposed a $6.48 billion settlement, which it claims is one of the largest in the history of tort litigation. The company needs the votes of 75% of claimants before a subsidiary can ask a bankruptcy judge to impose the settlement on all of them. J&J alleges that opposing plaintiffs’ lawyers are acting out of greed to extract additional fees, while the plaintiffs’ lawyers accuse J&J of abusing the bankruptcy system to deny plaintiffs the right to test their claims before a jury. For J&J, the allure of Chapter 11 lies in the fact that bankruptcy judges can enforce global settlements that permanently halt all related lawsuits and forbid new ones.