A judge will decide the fate of J&J Baby Powder’s bankruptcy strategy in February

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Johnson & Johnson is expected to know by the end of next month whether its controversial bankruptcy filing to try to resolve billions of dollars in cancer claims can proceed, or whether the consumer products giant must individually pursue about 38 000 lawsuits.

U.S. Bankruptcy Judge Michael B. Kaplan said in court on Friday that he would rule by February 28 on a request to dismiss the bankruptcy case filed by a J&J unit tasked with paying claims related to the allegations. that its baby powder causes certain cancers.

“We can then see where this case goes by the end of February,” Kaplan told J&J lawyers and lawyers representing tens of thousands of women who say they contracted ovarian cancer from using powder to baby.

J&J created a unit called LTL Management and filed for bankruptcy to resolve all pending and future lawsuits regarding baby powder. All proceedings are temporarily suspended while the bankruptcy case continues. Kaplan will hold a multi-day trial starting Feb. 14 to decide whether the bankruptcy should be dismissed.

If Kaplan allowed the bankruptcy to proceed, LTL would be able to create a J&J-funded trust that would pay current and future baby powder claims. The company has offered to put at least $2 billion in such a trust. Lawyers for the baby powder plaintiffs say they want to pursue the lawsuits instead of negotiating the size of a bankruptcy trust fund.

The biggest baby lawsuit the company has lost has resulted in more than $2 billion judgement against J&J which was appealed all the way to the U.S. Supreme Court. After this decision, the company attempted to resolve all claims in bankruptcy instead of facing thousands of lawsuits across the country.

J&J has repeatedly defended bankruptcy, arguing that it complies with all state and federal laws and was designed to help pay all alleged victims. J&J also denies that baby powder is a health hazard.

The case is LTL Management LLC, 21-30589, US Bankruptcy Court, Western District of North Carolina (Charlotte)

© 2022 Bloomberg L.P.

Copyright 2022 Bloomberg.

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