J&J mulls shifting liabilities from baby powder suits to new company

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Bankruptcy plan could result in lower payouts for cases that do not settle beforehand

Bottles of Johnson & Johnson baby powder in a pharmacy in New York, US. Picture: REUTERS/LUCAS JACKSON

J&J has not yet decided whether to pursue the bankruptcy plan and could ultimately abandon the idea, some of the people said. “Johnson & Johnson Consumer has not decided on any particular course of action in this litigation other than to continue to defend the safety of talc and litigate these cases in the tort system, as the pending trials demonstrate,” the J&J subsidiary housing the company’s talc products said in a statement provided to Reuters.Should J&J proceed, plaintiffs who have not settled could find themselves in protracted bankruptcy proceedings with a likely much smaller company.

J&J could also explore using another mechanism to effectuate the bankruptcy filing besides the Texas law, some of the people said. Plaintiffs’ lawyers view the two-step bankruptcy strategy as one that skirts potentially expensive settlements or judgments. Companies view it as a way to corral numerous lawsuits in one court for efficient negotiations that bankruptcy law dictates for asbestos liabilities. The company outside bankruptcy can reach a funding agreement with the entity navigating a court restructuring to cover future settlement payments.

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