J&Js 8.9B talc settlement faces bankruptcy test, get lawyer.

Johnson and Johnson’s (JNJ.N) proposed $8.9 billion settlement of lawsuits that claim the talc product causes cancer is facing a major obstacle this week when a U.S. bankruptcy judge in New Jersey considers whether or whether a J&J subsidiary could resolve the matter with bankruptcy again.

J&J division LTL Management’s initial attempt at doing so was rejected in April after a U.S. appeals court ruled that the company needed to be financially troubled enough to qualify for bankruptcy relief.

LTL promptly declared bankruptcy a second time and claimed that its latest initiative had gained more supporters from plaintiffs in a complete settlement of existing and future lawsuits claiming that J&J’s baby powder, as well as other talc products, could contain asbestos and led to mesothelioma, Ovarian and other cancers. J&J has stated that its Talc products are safe and don’t contain asbestos.

Lawyers representing cancer patients and their watchdog, the U.S. Justice Department’s bankruptcy monitor, have called for the second bankruptcy of LTL to be disregarded as a violation and a violation of U.S. bankruptcy law. The cancer patients who oppose that bankruptcy resolution have argued this second chapter rehashes the same legal tactic to stop their clients’ cases from getting listened to by juries.

On Wednesday, U.S. Bankruptcy Judge Michael Kaplan in Trenton is scheduled to hear several days of arguments and evidence before deciding. Kaplan, who’s decision in favor of LTL’s initial bankruptcy filing was reversed by the 3rd U.S. Circuit Court of Appeals, has stated that he will decide on whether to revoke the second bankruptcy of LTL by early August.

LTL executives, including the chief lawyer John Kim, will appear in court on Tuesday. Jim Murdica, a lawyer who participated in negotiations regarding the $8.9 billion settlement for LTL and J&J, and Mikal Watts, a lawyer representing plaintiffs in several cases, are scheduled to testify on Wednesday.

Erik Haas, J&J’s worldwide vice president for litigation, stated in a statement released last week that the bankruptcy settlement will provide a fair and quicker solution for people living with cancer than the cases with another court.

The lawyers who challenge J&J’s settlement proposal argue that J&J has created an “illusion” of backing by signing deals with plaintiffs’ lawyers, such as Watts, who swiftly agreed to sign up many clients but never filed a lawsuit against J&J.

The bankruptcy proceedings of LTL have halted the 38,000 lawsuits filed before October 2021. Kaplan has declared that bankruptcy is not enough to stop litigation involving talc by allowing one plaintiff’s lawsuit to go to trial and allowing for new complaints to be brought in the case of LTL and J&J so long as no further trials are scheduled without approval from the bankruptcy judge.

U.S. bankruptcy law typically protects debtors against lawsuits as they restructure through bankruptcy. Judges in bankruptcy have yet to ever extend the security measures to parent corporations that are not bankrupt, such as J&J.

 —

Read More: Johnson & Johnson Faces New Trial Over Talc Cancer Claims, Amid Settlement Push