A New Jersey state court allowed a lawsuit brought by shareholders of Bausch Health Cos. to proceed, opening a path to stop a planned spinoff of the company’s vision-care business, WSJPro Bankruptcy reported. The investors said divesting the division would deplete the company of valuable assets and leave it unable to pay a potential multibillion judgment in separate pending lawsuits in a federal court. The Canadian pharmaceutical company in 2020 said it planned to spin off the fast-growing eye-care business from its core pharmaceutical operations as it faced challenges including competition from bigger rivals and generic drugmakers. Last year, the company also lost a major patent dispute that threatens to end its exclusive rights over one of its key drugs. Bausch Health had asked Superior Judge Margaret Goodzeit to dismiss the shareholder lawsuits, which seek to stop the spinoff of the vision-care assets and allege that it would be a fraudulent transfer because the transaction would leave the company in a dire financial condition. In her ruling on Monday, Judge Goodzeit said the lawsuit about a potential fraudulent transfer can move forward, saying that any injunctive relief for the shareholders would depend on the outcome of their lawsuits in federal court and that a decision “enjoining” the distribution of the company’s remaining shares in the vision-care unit “could be appropriate because it would preserve the status quo between the parties.”
