Facing tens of thousands of mesothelioma and ovarian cancer lawsuits and already ordered to pay billions in compensation, Johnson & Johnson has repeatedly pursued a complex bankruptcy maneuver. Despite the company’s attempts to place a subsidiary into bankruptcy, the Third Circuit Court of Appeals upheld the bankruptcy court’s decision to dismiss the case, saying there was a lack of good faith in the application.
Bankruptcy Claim Sought to Evade Mesothelioma and Ovarian Cancer Lawsuits
Ever since consumers learned that Johnson & Johnson’s Baby Powder and other talcum powder products were contaminated with asbestos, those diagnosed with mesothelioma and ovarian cancer have been filing personal injury lawsuits against the company. After many plaintiffs were awarded multi-million dollar verdicts, the company pursued a controversial legal maneuver called a Texas two-step: They established a subsidiary, LTL Management, to hold its asbestos liabilities and then had the subsidiary file for bankruptcy.
In response to that initial bankruptcy filing, attorneys representing mesothelioma and ovarian cancer victims moved to dismiss the claim for lack of good faith. Though the bankruptcy court denied this motion, the Third Circuit reversed its decision, noting that bankruptcy filings are barred absent financial distress. Johnson & Johnson then lowered the amount it was funding the subsidiary with and then it refiled for bankruptcy.
Bankruptcy Claim is a Transparent Attempt to Avoid Paying Mesothelioma Claims
When the bankruptcy court received the second application for bankruptcy, it referenced the Third Circuit’s previous ruling and noted that the company was still not financially distressed. LTL then appealed that decision, pointing to its anticipated liabilities and diminished funding amount. The Third Circuit rejected the company’s argument, writing that it had not been filed in good faith because it would not serve a valid bankruptcy purpose.
If you or someone you love has been diagnosed with an asbestos-related disease after having used Johnson & Johnson’s talc-based products, the Patient Advocates at Mesothelioma.net can help. Contact us today at 1-800-692-8608 to learn more.
