The U.S. Trustee Program, which oversees bankruptcy cases as part of the U.S. Department of Justice, filed a motion in October 2024 to dismiss yet another attempt for Johnson & Johnson to settle its ongoing talcum powder lawsuits through bankruptcy court.
One month before the motion to dismiss, J&J used its subsidiary company, now named Red River Talc LLC, to file for Chapter 11 bankruptcy for the third time. Before proceeding with its bankruptcy attempt, the pharmaceutical company held a vote with over 60,000 talcum powder plaintiffs on whether it should proceed with a global settlement.
J&J claims that 83% of lawsuit participants agreed to an $8 billion settlement offer, but some plaintiff attorneys suggest that foul play could have occurred during the voting process.
Why did the U.S. Trustee decline J&J’s bankruptcy filing?
In its motion to dismiss, the U.S. Trustee Program stated that Johnson & Johnson was trying to use bankruptcy protection to “immunize itself from billions of dollars of personal injury liability” without actually needing to go bankrupt. In previous years, J&J’s last two bankruptcy attempts were both dismissed for the same reason. Neither Johnson & Johnson nor its subsidiary company were in any genuine risk of bankruptcy, but J&J still tried to use bankruptcy court to forcefully settle the talcum powder lawsuit regardless.
For J&J’s most recent bankruptcy attempt, it tried to achieve a different outcome in court by renaming Red River Talc (formerly named LTL Management, LLC) and moving it from New Jersey to Texas. But despite its new tricks, the Program found that Johnson & Johnson’s newest Chapter 11 bankruptcy filing relied on the same old strategy that failed in court twice before.
“Taken as a whole, J&J’s tactics are a textbook example of bad faith. [Red River Talc] has no need for bankruptcy relief and it had no valid restructuring purpose when it filed its bankruptcy petition.”
How will this affect the talcum powder lawsuit?
Before the motion to dismiss, Johnson & Johnson was expected to follow through with its bankruptcy plan and settle around 60,000 talcum powder claims for roughly $8 billion. Now, the future of the talcum powder lawsuit will depend on whether the U.S. Trustee Program’s motion to dismiss is allowed to proceed or if it will be rejected by a higher court. For now, Johnson & Johnson has until mid-November to make an argument explaining why the Program’s motion to dismiss should be rejected.
