Rich companies are using a quiet tactic to block lawsuits: bankruptcy

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Companies that aren't bankrupt are using controversial maneuvers in U.S. bankruptcy court to block tens of thousands of suits. A woman suing Johnson & Johnson died while her case was in legal limbo.

Hope Schiller Wilt and her daughter, Hanna Wilt, outside her home on Nov. 19, 2021, in Manasquan, N.J. The family plans to continue her lawsuit."It's what she wanted," her mother said.

Her lawsuit against Johnson & Johnson, the company she blamed for making her sick, had been abruptly blocked a few weeks earlier. The company had faced some 38,000 lawsuits claiming that trace amounts of asbestos contamination in Johnson's baby powder caused ovarian cancer and mesothelioma. Company executives, who declined NPR's repeated requests for an interview, have long denied the product is contaminated or caused anyone's cancer.

Then, using a wrinkle in Texas state law, J&J was able to transfer all of the potential liability linked to the tsunami of baby powder asbestos claims into the shell of the new company, while keeping valuable assets separate. But for families seeking compensation from J&J, the move by one of the wealthiest corporations in the U.S. sparked anger and dismay.

But they're not being forced to endure the financial pain and exposure that comes with actually filing for bankruptcy. Members of the Sackler family who own Purdue Pharma aren't themselves bankrupt. But they're expected to piggyback on the bankruptcy of their insolvent drug company. In the end, if the deal is finalized, those harmed by OxyContin addiction will be forced to forfeit any right to sue the Sacklers, while oftenThe Koch brothers, billionaires known for funding a wide range of conservative political organizations, also used a bankruptcy maneuver to freeze asbestos-related lawsuits linked to one of their companies, Georgia-Pacific.

 

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