A federal court has rejected Johnson & Johnson's attempt to shed its baby powder liabilities by transferring them to a subsidiary and placing that subsidiary in bankruptcy.
In this photo, a bottle of Johnson & Johnson baby powder is displayed on a table on November 12, 2021 in San Anselmo, California. Photo: Justin Sullivan/Getty Images
A federal appellate court on Monday rejected Johnson & Johnson's attempt to shed its baby powder liabilities by transferring them to a subsidiary and placing that subsidiary in bankruptcy.J&J faces some 38,000 lawsuits from people and their survivors claiming that the company's talc-based powder caused cancer — an allegation that J&J has repeatedly denied.
That means J&J will have to find an alternative way to deal with its liabilities — which may total in the billions of dollars — unless this ruling is reversed by the Supreme Court.of the financially healthy J&J's corporate assets from the legal claims. Critics said the company can afford to pay off alleged victims.
"Only a putative debtor in financial distress can" get bankruptcy protection, the court ruled. "LTL was not. Thus we dismiss its petition."J&J said in a statement that it will appeal the ruling, rejecting the Third Court's contention that the company did not file the case in good faith. "As we have said from the beginning of this process, resolving this matter as quickly and efficiently as possible is in the best interests of claimants and all stakeholders," J&J said. "We continue to stand behind the safety of Johnson’s Baby Powder, which is safe, does not contain asbestos and does not cause cancer.”
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