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Johnson & Johnson is using a bankruptcy maneuver to block lawsuits over baby powder cancer claims

Alex Gorsky, chairman and CEO of Johnson & Johnson. PHOTO: 3BL Media

By Brian Mann | 21 October 2021

NPR — Johnson & Johnson is drawing criticism after using a controversial bankruptcy maneuver to block roughly 38,000 lawsuits linked to claims that its talc baby powder was contaminated with cancer-causing asbestos.

The health products giant used a quirk of Texas state law to spin off a new company called LTL, then dumped all its asbestos-related liabilities — including the avalanche of lawsuits — into the new firm.

LTL filed for bankruptcy last week in a federal court in Charlotte, N.C., a move designed to sharply limit efforts to recover damages for those who say they were harmed by J&J’s baby powder.

“Johnson & Johnson doesn’t have this liability anymore. They pushed all of it into the company they created just to file for bankruptcy,” said Lindsey Simon, a bankruptcy expert at the University of Georgia School of Law.

As a result, Simon said, “consumers can’t recover [damages] against a big solvent company. They have to recover against this smaller fictional company created [by J&J].” […]

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