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A federal judge has denied a group of cancer victims’ request to halt Johnson & Johnson (NYSE:JNJ) from moving forward with a proposed bankruptcy settlement addressing tens of thousands of lawsuits alleging the company’s talc products, including baby powder, contain cancer-causing asbestos.
On June 11, the cancer victims sought a preliminary order in New Jersey to prevent J&J from filing for bankruptcy outside the state, aiming to disrupt the $6.48 billion settlement plan.
However, U.S. District Judge Michael Shipp ruled that he could not grant the motion, stating that the potential harm to the victims was “strictly hypothetical,” Reuters reported. The judge noted that he lacked jurisdiction to resolve disputes over “events that have not, and may never, occur.”
Also Read: Johnson & Johnson Ordered To Pay $260M In Latest Talc Trial.
Johnson & Johnson aims to secure support from 75% of claimants for the prepackaged bankruptcy plan, with a voting deadline set for July 26. The healthcare giant faces lawsuits from over 61,000 plaintiffs alleging its talc products caused ovarian cancer or mesothelioma, a deadly cancer linked to asbestos exposure. Johnson & Johnson maintains that its talc is safe, asbestos-free, and does not cause cancer.
Unlike the civil justice system, the company argues that a bankruptcy settlement would provide fair and equitable compensation to claimants, where most plaintiffs receive nothing while some win outsized awards.
Plaintiffs’ attorneys opposing the plan argue that it is a fraudulent attempt to shield billions of dollars of the company’s assets from plaintiffs, preventing them from receiving deserved compensation. Johnson & Johnson has twice failed to implement a bankruptcy strategy to resolve current and future talc lawsuits, Reuters reports.
Courts have previously ruled that Johnson & Johnson’s subsidiary lacked the “financial distress” necessary for a legitimate bankruptcy filing.
Johnson & Johnson’s current plan focuses on resolving claims in bankruptcy from women with ovarian and other gynecological cancers allegedly linked to talc.
The company has settled most mesothelioma cases outside of bankruptcy, and recently finalized a $700 million agreement to resolve claims from state attorneys general.
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Price Action: JNJ shares were up 1.2% to $147.91 at the time of publication Friday.
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Posted In: JNJ
