J&J tries to push talc bankruptcy over the line once again

Johnson & Johnson's long-running effort to put litigation claiming its talc products caused cancer has continued with a third attempt to place a subsidiary company into bankruptcy.

Red River Talc LLC was set up specifically to resolve the thousands of claims related to ovarian cancer arising from cosmetic talc litigation, separated from the group's core business and armed with billions of dollars in settlement money to provide compensation to alleged victims.

The settlement depends on the company going through the bankruptcy process, but J&J has failed to get the plan through on two previous occasions. Its latest attempt comes with another $1.75 billion added to the settlement amount – taking the total to $8 billion over 25 years – or around $10 billion taking into account inflation over time.

J&J said its latest bankruptcy bid is backed by around 83% of the 60,000-plus claimants cited in lawsuits, who are claiming that its talc products contained asbestos and led to cancers. That "far exceeds the 75% approval threshold required by the US Bankruptcy Code to secure confirmation of the plan," it added.

"The overwhelming support for the plan demonstrates the company's extensive, good-faith efforts to resolve this litigation for the benefit of all stakeholders," said Erik Haas, worldwide head of litigation for J&J, who estimates it would resolve 99.75% of all pending talc lawsuits.

"This plan is fair and equitable to all parties and, therefore, should be expeditiously confirmed by the bankruptcy court," he added.

Opponents of the deal claim, however, that it could protect J&J from any future plaintiff claims, allowing the company to sidestep legal and financial obligations, whilst also underpaying victims. The new attempt is being heard in a bankruptcy court in Houston.

One lawyer representing plaintiffs who are opposing the deal, Andy Birchfield of Beasley Allen Law Firm, told Reuters this is "another fraudulent effort by J&J to manipulate the bankruptcy process and minimise the legitimate claims of ovarian cancer victims."

The current settlement relates only to ovarian and other gynaecological cancers, which make up the bulk of the class action litigation the company is facing. Claims talc caused other cancers, like mesothelioma, are not included.

J&J – which has denied the allegations – took all its talc-based products off the market as of 2023 and is now using cornstarch instead.

In its second-quarter results update, the company said "talc matters" had resulted in an on-paper charge of $3 billion in the first six months of the year, down from $7.1 billion in the same period of 2023.