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A Delaware judge declined to prohibit Johnson & Johnson from separating talc-related liabilities from the rest of its business, ruling against personal-injury lawyers who said they fear the company could place thousands of cancer claims into bankruptcy to try to drive settlements, WSJ Pro Bankruptcy reported. Judge Laurie Selber Silverstein of the U.S. Bankruptcy Court in Wilmington, Del., on Thursday didn’t bar J&J from separating talc liabilities from other assets, a corporate move that injury claimants see as a likely first step toward placing tens of thousands of tort claims in chapter 11. As of July, the healthcare company faced roughly 34,600 lawsuits linking its talc-based baby powder to ovarian cancer, asbestos cancer and other illnesses. In settlement talks, the company has said it could isolate its talc liabilities within a new corporate entity that could then file for bankruptcy. Separating tort liabilities from corporate assets is possible under a Texas statute through what are known as divisional or divisive mergers. They have been used by several businesses facing large numbers of asbestos claims in recent years to silo those liabilities in newly formed units that were then placed in chapter 11. J&J hasn’t disclosed any strategy for the talc lawsuits other than to defend the safety of its products in pending cases. The company also hasn’t denied that a divisive merger for its talc liabilities is a possibility, Judge Silverstein said earlier this week. Injury claimants said that would be a first step toward shifting talc liabilities into a bankruptcy proceeding, shielding J&J from further jury trials. Talc claimants asked to restrain J&J on the theory that its alleged strategy would harm the reorganization efforts of another company, Imerys Talc America Inc., which mined and supplied talc for J&J for decades before its 2019 bankruptcy. The judge said yesterday that the injury claimants have no legal standing to seek such an injunction against J&J because they have no direct interest in the contractual arrangements between the company and Imerys.

A U.S. judge said yesterday that he now anticipates a ruling on OxyContin maker Purdue Pharma LP’s bankruptcy reorganization plan on Wednesday of next week instead of this week because he needs more oral argument on certain issues, Reuters reported. U.S. Bankruptcy Judge Robert Drain was originally expected to rule on Friday, Aug. 27. Judge Drain did not specify the issues on which he needs to hear more. If Judge Drain approves the deal, it would clear a path to resolve thousands of opioid lawsuits and shield the company’s wealthy Sackler family owners from future litigation. The plan, which Purdue values at more than $10 billion, would dissolve the drugmaker and shift assets to a new company not controlled by Sackler family members. The new company would be owned by a trust run to combat the opioid epidemic in U.S. communities that alleged the company and its owners aggressively marketed the painkiller OxyContin while playing down its abuse and overdose risks. The plan also includes legal releases shielding Sackler family members from future opioid litigation, a controversial provision that some states opposed. Congressional Democrats in recent weeks circulated legislation to block such legal releases and urged the Justice Department to appeal the plan, efforts that failed to gain traction.

The idled Limetree Bay oil refinery could resume operations with “minimal capital” and could “easily” be transformed to produce biofuels, the investment banker hired to attract investors said in a marketing document, Reuters reported. The St. Croix, U.S. Virgin Islands, refinery filed for bankruptcy in July after investors poured $4.1 billion into an unsuccessful revival of the aging facility. U.S. regulators halted processing after residents complained of foul odors, oil that was sprayed on nearby homes and contaminated drinking water supplies. Jefferies Financial Group Inc., which was hired to find a buyer, said in its marketing pitch that “zero facility investment” is required for a restart. It also said that the refinery had been fully operational since January 2021 and has “strong government support” at territorial and municipal levels. It made no mention of the U.S. Environmental Protection Agency order shutting down the plant or requirements to install air monitoring systems before a restart. U.S. prosecutors also are investigating potential criminal violations of the Clean Air Act, a Limetree attorney said during a bankruptcy hearing in early August.

During the final day of argument in Purdue Pharma’s bankruptcy trial, lawyers for the OxyContin maker said its proposed $10 billion settlement of opioid claims is by far the best deal for creditors, Bloomberg News reported. Seeking to convince U.S. Bankruptcy Judge Robert Drain that Purdue’s proposal is better than a liquidation of the business and free-for-all litigation stampede against itself and its owners, Marshall Huebner of Davis Polk & Wardwell, said the plan would deliver at least $5.5 billion of cash to creditors. The fact that most U.S. states now support the deal rather than pushing to continue their own “speculative” lawsuits shows the deal is sufficient, he added. Still, about 10 state attorneys general are challenging the deal, arguing in large part that they should be able to sue Purdue’s owners, members of the billionaire Sackler family, regardless of the settlement. Purdue has said that wouldn’t work, because its owners are requiring broad legal immunity from opioid lawsuits in exchange for more than $4 billion of their own cash, and allowing some states to go forward would cause the entire settlement to unravel. Members of the Sackler family have previously denied any wrongdoing. Reuters reported that Judge Drain expects to rule on Friday on the OxyContin maker’s request to approve its settlement of opioid-related litigation.

Tix Corp. filed for bankruptcy after the COVID-19 pandemic forced the Las Vegas discount ticket seller to close its Tix4Tonight-branded booths on the Strip and its online ticket-sales operations for more than a year, WSJ Pro Bankruptcy reported. The company filed yesterday for chapter 11 protection in the U.S. Bankruptcy Court in Las Vegas, saying that it would sell substantially all its assets. Chief Executive Mitch Francis has expressed an interest in buying the company out of bankruptcy, according to court papers filed by Kimberly Simon, Tix’s chief operating officer. Founded in 1993, the company sells tickets to shows, tours and attractions out of three booths operating on the Las Vegas Strip, according to court filings. The company said it was forced to close its ticket booths in March 2020, when the pandemic shut down all restaurants, bars, hotels and entertainment venues in the city, and lay off its employees. Even after reopening the booths in June 2021, Tix continued to struggle financially, in part because as shows and tours resumed, high demand meant there were fewer tickets available for discounters, Simon’s filing said. Tix said that it expects normal operations to continue without affecting customers.

A group of cancer victims blaming Johnson & Johnson’s talc-based baby powder for the disease asked a Missouri court to block the company from taking steps to place its talc liabilities into chapter 11, while a bankruptcy judge in Delaware expressed doubts about a nearly identical request pending there, WSJ Pro Bankruptcy reported. Personal-injury claimants asked the Missouri court yesterday for an injunction preventing J&J from splitting its core assets from its liabilities to tens of thousands of individuals who allege they developed ovarian cancer, asbestos cancer and other diseases after exposure to the company’s talc-based baby powder. J&J declined to comment on the Missouri request, which escalates a confrontation between injury claimants and the company about its intentions for dealing with roughly 34,600 lawsuits pending against it as of June alleging personal injuries from talc. Also on Tuesday, a bankruptcy judge in Wilmington, Del. deferred ruling on a separate request by other injury claimants to pre-empt J&J from separating its talc liabilities from its core business, a potential first step toward moving thousands of injury claims into chapter 11.

Not quite a decade ago, the potential for defective Takata Corp. air bags to explode in a crash erupted into the global auto industry’s most complex and far-reaching safety crisis in history. While roughly 100 million of them were recalled worldwide, more than 14 million as of early July still hadn’t been fixed in the U.S. alone, in addition to an unknown but likely substantial number in the rest of the world. That means that millions of car owners — especially those in countries with weak consumer protections — may remain unaware that the propellant used in their cars’ air bags could be degrading as a result of heat and humidity, turning their vehicles into potential explosion hazards. At least 37 fatalities and 450 injuries allegedly linked to the defective parts worldwide have been reported to U.S. auto safety regulators. Of the deaths, 19 were in the U.S., while others have been reported from all corners of the globe, including in French Guiana, Nigeria, Brazil, Australia, and China.

Purdue Pharma LP yesterday defended a $4.5 billion settlement with the drugmaker’s Sackler family owners, saying that the proposed deal averts a long, costly legal fight to access family wealth housed overseas and in hard-to-reach trusts, WSJ Pro Bankruptcy reported. Marshall Huebner, a lawyer representing Purdue, said during closing arguments of a trial scrutinizing the settlement that the company believes it has strong legal claims against the Sacklers, including clawing back transfers made to the family before Purdue’s 2019 bankruptcy filing. But even if the lawsuits were successful, Huebner said, collecting any judgments in excess of the $4.5 billion provided by the settlement would be hard because the Sacklers have wealth and assets in trusts, and some family members live overseas. Settling with the Sacklers is a cornerstone of Purdue’s broader plan to exit chapter 11 as a new public benefit company while cutting ties to its founding family. The alternative of lengthy and expensive lawsuits would be “litigated to the bitter end by the Sacklers,” Huebner said. A committee representing Purdue’s unsecured creditors also said that recovering any potential judgment would pose additional difficulties because many of the family’s assets are in overseas trusts. The benefits of settling with the Sacklers, rather than pursuing them through litigation, was part of the company’s final defense of its reorganization plan. Judge Robert Drain of the U.S. Bankruptcy Court in White Plains, N.Y., is expected to decide within days whether to approve the settlement, which has broad support from groups representing personal injury claimants, governments and most states. Settlement funds would be used to fund opioid abatement programs across the country.

The founder of LeClairRyan will likely be revealed as an additional defendant in the $128 million lawsuit targeting UnitedLex over its role in the firm’s bankruptcy, after a bankruptcy judge on Thursday gave the chapter 7 trustee the go-ahead to amend her complaint, The American Lawyer reported. Chapter 7 trustee Lynn Tavenner is seeking to hold an unnamed attorney partially responsible for the failure of the defunct firm’s joint venture with UnitedLex, claiming that the individual’s “misconduct” was integral to the New Law provider’s “scheme to loot [LeClairRyan] of its valuable assets.” While counsel representing that attorney at a hearing Thursday were careful to refer to him as “John Doe” or “former attorney,” they filed a notice of appearance earlier this month indicating their client was LeClairRyan founder Gary LeClair, who is now a partner at Williams Mullen. At Thursday’s hearing, U.S. Bankruptcy Judge Kevin R. Huennekens ruled that Tavenner could amend her complaint, after Tavenner argued that the “former attorney’s” conduct only became clear as her investigation continued. The amended complaint is also likely to expand the scope of allegations against UnitedLex, even after the judge found in July that much of the conduct originally highlighted by the trustee was not illegal. Tavenner has alleged that, by putting nonlawyers in control of the firm’s affairs and by prioritizing payments to UnitedLex over the firm’s other financial obligations, along with other missteps, UnitedLex’s actions ultimately cost the law firm at least $41.7 million. She is seeking treble damages. Gary LeClair did not immediately respond to a request for comment Friday; nor did his attorneys, William Broscious and Andrew Bowman. Additional former equity members of LeClairRyan may also ultimately face lawsuits from the trustee, after the judge agreed to revisit procedures that had been previously established to protect their identities and reputations.

A bankruptcy judge maintained a pause on asbestos-injury litigation against U.S. units of Ireland’s Trane Technologies PLC but said the company might have gone too far by placing its asbestos liabilities in chapter 11, WSJ Pro Bankruptcy reported. Judge J. Craig Whitley of the U.S. Bankruptcy Court in Charlotte, N.C., said that Trane’s move to split off its asbestos liabilities away from its core climate-control business before placing them in bankruptcy appears to have had a “material, negative effect” on the legal rights of thousands of injury claimants. Yesterday’s ruling marked the second time in recent weeks that Judge Whitley has suggested a solvent asbestos manufacturer might have crossed a legal line by hiving off asbestos liabilities and placing them in chapter 11. Earlier this month, he made similar comments about CertainTeed LLC, a U.S. unit of France’s Compagnie de Saint-Gobain SA that is using bankruptcy to try to settle vast asbestos litigation. Judge Whitley didn’t make any final conclusions in either case about whether the companies’ moves to silo asbestos liabilities ahead of a bankruptcy filing did, in fact, defraud asbestos claimants. Both decisions dealt with a Texas statute that allows companies to split themselves in two and allocate their liabilities between the successor entities. CertainTeed and Trane each used these transactions, known as divisive mergers, to isolate their asbestos liabilities in newly formed subsidiaries that then filed for chapter 11.