BY Fraser Tennant
In a bid to end tens of thousands of lawsuits alleging baby powder and other talc products caused cancer, a subsidiary of healthcare giant Jonson & Johnson (J&J) has filed for Chapter 11.
Red River Talc LLC, a unit of J&J, made the filing after it received the support of the overwhelming majority – approximately 83 percent – of current claimants for a proposed bankruptcy plan.
J&J faces lawsuits from more than 62,000 claimants who alleged that its baby powder and other talc products were contaminated with asbestos and caused ovarian and other cancers. J&J denies the allegations and has said that none of the talc-related claims against it have merit.
Such claims, states J&J, are premised on allegations that have been rejected by independent experts, as well as governmental and regulatory bodies, for decades.
However, following extensive negotiations with counsel for claimants who initially opposed the bankruptcy plan, Red River has agreed to increase its contribution to the settlement by $1.75bn to approximately $8bn. The unit has also agreed to commit an additional $1.1bn to the bankruptcy trust for distribution to claimants.
The support provided by the plan far exceeds the 75 percent approval threshold required by the US Bankruptcy Code to secure confirmation, which is also supported by the future claims representative, an attorney representing future claimants.
J&J has backed Red River’s commitments and also agreed to contribute an additional $650m to resolve the claims for legal fees and expenses sought by plaintiffs’ counsel for their leadership roles in the multidistrict litigation, where most of the filed ovarian claims are pending.
In aggregate, the contemplated settlement represents a present value of approximately $8bn to be paid over 25 years, totalling approximately $10bn – an agreement that constitutes one of the largest settlements ever reached in a mass tort bankruptcy case.
“The overwhelming support for the plan demonstrates the company’s extensive, good-faith efforts to resolve this litigation for the benefit of all stakeholders,” said Erik Haas, worldwide vice president of litigation at J&J. “This plan is fair and equitable to all parties and, therefore, should be expeditiously confirmed by the Bankruptcy Court.”
The bankruptcy plan enables a full and final resolution of the ovarian talc litigation, resolving 99.75 percent of all pending talc lawsuits against J&J and its affiliates in the US.
News: J&J unit files for bankruptcy to advance $10 billion talc settlement