J&J to disclose $6.5 billion talc support
Johnson & Johnson is preparing to unveil widespread support in the coming days for a $6.48 billion offer to settle tens of thousands of lawsuits alleging that Baby Powder and other talc products cause cancer, two people familiar with the matter said.
The health care giant plans to reveal on Friday that 75% or more of plaintiffs who say J&J talc makes them sick have voted for a settlement that would stop current and future lawsuits, the people said.
J&J is preparing to have the subsidiary file for bankruptcy protection as soon as next week to complete the deal, the people said. Support from 75% of the plaintiffs is the threshold required by law for a judge to approve the type of settlement agreement proposed by J&J. The deadline for voting was July 26.
The company maintains its talc products are safe and do not cause cancer. J&J’s timetable for disclosing support for bankruptcy petitioners and filing for bankruptcy, which has not been previously reported, remains fluid and could change, one of the people said.
Earlier this week, J&J was still sifting through the plaintiffs’ ballots, although it was expected to get the support it needs to put the proposed settlement before the bankruptcy judge for approval, the person said.
“We cannot comment until the vote is confirmed,” a J&J spokesperson told Reuters.
J&J is facing talc lawsuits from more than 62,000 plaintiffs, according to the filing firm. But the number rises to 100,000 when plaintiffs who have not yet filed are counted, said Erik Haas, J&J’s global vice president of litigation.
After being rejected twice by federal courts, J&J is again trying to end the proceedings in what is being called a “Texas two-step” bankruptcy.
The two-step process involves releasing its talc debt to a newly formed subsidiary, which then declares Chapter 11. The goal is to use the process to force all plaintiffs into a single settlement without requiring J&J to file for bankruptcy.
Some lawyers representing tens of thousands of cancer victims oppose J&J’s plan to try to implement the law a third time and are locked in a bitter battle with the company.
Courts have rejected J&J’s previous two-step bankruptcy in New Jersey, where the company is headquartered, on the grounds that the subsidiary does not have the “financial pressure” necessary for Chapter 11 protection. who differ in the degree of financial stress.
J&J’s current plan differs from the previous two in several important ways. The latest settlement deal addresses allegations that talc causes ovarian and other gynecological cancers, which are a number of claims J&J is facing.
It excludes other claims, including those by plaintiffs who say asbestos-laced talc caused their mesothelioma, a deadly cancer that attacks the thin layer of tissue that covers many internal organs. J&J claims its talc is asbestos-free.
The company has settled almost all of the mesothelioma cases out of bankruptcy court, as well as claims from states alleging that J&J misled consumers about the safety of its talc. Those deals removed opposition that helped ease its previous two-step bankruptcy.
J&J also this time asked for pre-bankruptcy pay votes. Previous Chapter 11 cases had proposed that plaintiffs vote after the petition was filed.
J&J wants to use Chapter 11 lawsuits because federal judges can enforce global agreements that permanently halt all related lawsuits and bar new ones, all for a modest fee.
In a class-action court system, rather than a bankruptcy court, any settlement J&J reached with other customers would still leave collateral or future plaintiffs with the right to sue, potentially exposing the company to the kind of multibillion-dollar decisions it has been prompted to pursue. two-step strategy first.
J&J has won many cases that have gone to trial. But its losses included a Missouri settlement for ovarian cancer victims that ended up costing J&J $2.1 billion.
— Mike Spector, Reuters
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