Judge Michael Kaplan of the U.S. Bankruptcy Court in Trenton, N.J.,threw out the second chapter 11 case that Johnson & Johnson filed to resolve its mass talc liabilities, again shutting down the healthcare-product company’s plan to achieve an $8.9 billion settlement, WSJ Pro Bankruptcy reported. Judge Kaplan said that J&J affiliate LTL Management LLC, created to carry the company’s talc-related liabilities into bankruptcy, wasn’t in sufficient financial distress to warrant granting it the legal protections of chapter 11. Friday’s ruling sets back J&J’s efforts to use the bankruptcy case to drive a settlement of mass claims alleging that its talcum-based baby powder caused cancer and contained asbestos, which the company denies. J&J said that it disagreed with the decision and would appeal. Outside of bankruptcy, J&J faces a tough road to resolving the talc litigation because of the large number of claims and the expectation that more talc users will sue for compensation in the future. In his ruling, Judge Kaplan cited a recent appeals court decision that threw out a prior bankruptcy case filed by LTL in 2021 to try to drive a settlement. A federal appeals court dismissed that chapter 11 case in January, but LTL filed for bankruptcy again in April, this time with a settlement offer supported by some plaintiffs’ law firms. That offer, valued at $8.9 billion, would rank among the largest tort settlements ever if accepted.
