J&J explores plan to offload talc liabilities into bankruptcy

By Becky Bargh | Published: 19-Jul-2021

Plaintiffs with outstanding payouts could receive less money from the conglomerate if it goes ahead with the move

Johnson & Johnson (J&J) is exploring an arrangement that could see it offload multiple million-dollar liabilities from widespread lawsuits that accused its Baby Powder product of containing cancer-causing asbestos.

According to Reuters, seven people familiar with the matter said that the healthcare giant could transfer the litigation into a newly created business that would then seek bankruptcy protection.

J&J’s attorneys are said to have told the plaintiffs’ lawyers of the plan, which could result in lower payouts for cases that are not settled ahead of the move.

The whistleblowers said that J&J has not made a final decision on the option and could abandon the idea.

Should J&J press on with its bankruptcy plan, future payouts would be dependent on how the company chooses to fund the business housing its liabilities.

J&J has faced legal action from tens of thousands of plaintiffs, claiming its iconic Baby Powder and talc-based products contained asbestos, causing ovarian cancer and mesothelioma, a type of cancer that most commonly affects the lining of the lungs.

In May 2020, J&J took the decision to stop selling its Baby Powder in the US and Canada due to “a barrage of litigation advertising”.

In a statement to Cosmetics Business, the conglomerate also said it had pulled the product due to “changes in consumer habits” and “misinformation around the safety” of its talc skus.

Some of the biggest payouts the household name has been ordered to cough up include a US$4bn fine to 22 women by a St Louis court in 2018 and $750m to four complainants by a New Jersey jury.

Throughout the numerous court battles, J&J has vehemently denied its talc-products contain asbestos, despite being ordered to recall powders by the FDA that were found to contain the deadly mineral.

J&J, however, pushed back at the US regulator for the validity of its tests on the firm’s products.

“We remain steadfastly confident in the safety of talc-based Johnson’s Baby Powder. Decades of independent scientific studies by medical experts around the world support the safety of our product,” it added.

Days before the decision was made to remove its Baby Powder from production, J&J’s talc supplier Imerys, which fell into bankruptcy in 2019, sold its North American mine in order to settle the torrent of lawsuits.

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