Recently, Johnson & Johnson (J&J) has suffered another legal setback in its attempt to resolve tens of thousands of talc-related cancer lawsuits through bankruptcy proceedings. A federal appeals court upheld the dismissal of the Chapter 11 bankruptcy case of J&J’s subsidiary, LTL Management LLC, dealing a blow to the company’s strategy of using bankruptcy to settle claims linked to its talc-based products.
The ruling affirms last year’s decision by a bankruptcy judge who rejected J&J’s argument that its liability exceeded $21 billion and that the company faced insolvency. The Philadelphia-based appeals court had previously struck down a similar bankruptcy plan from J&J, raising questions about the viability of its legal strategy.
J&J created LTL Management to handle all health claims related to its talc-based products, which plaintiffs allege were contaminated with toxic substances. The latest decision comes just before a deadline for women with ovarian and gynecological cancers to vote on whether to support a third bankruptcy filing by LTL. J&J aims to allocate $6.5 billion to settle ovarian cancer claims as part of an $11 billion resolution plan for current and future lawsuits.
Judge Thomas Ambro, writing for the appellate panel, stated that while mass-tort litigation can place financial strain on solvent companies, bankruptcy is only justified when insolvency is a realistic possibility based on meaningful evidence—not merely a speculative worst-case scenario. The judges also dismissed J&J’s argument that the second bankruptcy attempt was valid because a significant number of plaintiffs supported it.
Despite the ruling, J&J remains committed to pursuing its strategy. Erik Haas, the company’s worldwide vice president of litigation, confirmed that J&J plans to seek a review by the U.S. Supreme Court and will continue its efforts to gain broad plaintiff support for a third LTL bankruptcy filing.
The legal battle has sharply divided talc plaintiffs, with some supporting J&J’s offer to establish a trust fund while others insist the company should directly compensate victims. Last year, the same appeals court invalidated LTL’s first bankruptcy, arguing that J&J’s financial backing gave the subsidiary a “blank check.” Following that decision, J&J increased its settlement offer to $8.9 billion, but a federal bankruptcy judge in New Jersey dismissed the case, prompting the latest appeal.
Plaintiffs’ attorneys, including Andy Birchfield, who opposes J&J’s bankruptcy approach, have urged the company to abandon its legal maneuvers. “Now is the time for J&J to change course and act as a responsible company by offering truly reasonable compensation to its customers who have suffered serious injuries,” Birchfield said in a statement.
