Johnson & Johnson’s appeal of a 2023 court decision to dismiss its subsidiary company’s second attempt at filing for bankruptcy has been officially denied. In July 2024, the U.S. Third Circuit Court of Appeals agreed with the dismissal of LTL Management’s Chapter 11 bankruptcy case, stating that it “does not discern financial distress at LTL.”
When LTL’s second bankruptcy filing was dismissed by U.S. Bankruptcy Judge Michael Kaplan last year, he stated that companies must be in genuine financial distress in order to benefit from bankruptcy protection law. At the time, he found that LTL did not appear to be in financial distress.
Johnson & Johnson’s argument
In its appeal, J&J challenged that LTL Management was in financial distress because it would be unable to pay the money it owes for the talcum powder lawsuit in “both the short and long term.” The Third Circuit Court disagreed with J&J’s findings. According to the panel’s opinion, LTL’s assets exceeded $21 billion in value, which was the amount LTL estimated would be the “worst-case” scenario it would owe for current and future talcum powder lawsuits.
Johnson & Johnson also stated that a major talcum powder verdict in the future could drastically increase LTL’s worst-case scenario value, which it claims would be a “likely threat to exhaust available resources” for LTL Management.
The Third Circuit Court was not persuaded by this argument, either. In its opinion, the panel said that Johnson & Johnson’s claim “assumes too much too early” about the outcome of future talcum powder trials. Though it’s possible that LTL could be unable to pay its debts in the future because of a major talcum powder verdict, that doesn’t mean that LTL is in financial distress right now.
“When future insolvency is a realistic possibility based on meaningful evidence— not just the result of a highly speculative ‘worst-case’ scenario— a mass-tort defendant has a viable case for bankruptcy.”
What does this mean for the future of the talcum powder lawsuit?
The future of the talcum powder lawsuit strongly depends on whether talcum powder claimants choose to accept or decline Johnson & Johnson’s current $6.475 billion settlement offer. The final day to vote “yes” or “no” for the proposal was July 26, 2024, though the results have not yet been announced.
If 75% of talcum powder plaintiffs decide to accept the offer, then LTL Management (now LLT Management, as of December 2023) will file for Chapter 11 bankruptcy once again and start paying claimants over a 25-year period, preventing new lawsuits from being filed. If claimants reject the offer, then ovarian cancer victims will still be able to sue Johnson & Johnson and continue pushing for a larger settlement.
Depending on whether claimants accept or decline the offer, time may be running out to join the talcum powder lawsuit. If you or an immediate family member used J&J’s baby powder and developed ovarian cancer in 2014 or later, see if you qualify to join the talcum powder lawsuit while you still can.
