Johnson & Johnson talc powder spinoff files for bankruptcy
A bankruptcy move from Johnson & Johnson could stall any talcum powder settlements for the thousands of families that have sued the company for billions of dollars in damages in recent years.
Officials with Johnson & Johnson said they have created a new subsidiary called LTL Management. Johnson & Johnson said it then moved $2 billion in baby powder lawsuit settlement money to LTL, then submitted LTL for bankruptcy. LTL Management filed for bankruptcy protection in North Carolina on Thursday and listed its liabilities between $1 billion and $10 billion.
Johnson & Johnson itself has not filed for bankruptcy and neither has any of its other subsidiaries like Aveeno and Neutrogena.
The bankruptcy filing comes as Johnson & Johnson has faced public scrutiny over the long-term health effects of its baby powder. Thousands of women have sued Johnson & Johnson claiming the talcum used in the baby powder gave them ovarian cancer. Talcum is a mineral similar in structure to asbestos, which is known to cause cancer, and they are sometimes obtained from the same mines.
A U.S. government-led analysis of 250,000 women, the largest such study to look at the question, found no strong evidence linking talc powder with ovarian cancer. The lead author of the analysis called the results "very ambiguous" however.
Since the lawsuits have surfaced, Johnson & Johnson has stopped selling its talc powder. The company has set aside almost $4 billion for settling future lawsuits tied to the product.
In a statement Thursday, Johnson & Johnson said "all cosmetic talc cases will be stayed pending the outcome of the proceedings," meaning no lawsuit settlements will be paid until bankruptcy court officials determine who gets how much and when. Earlier this year, a group of Black women sued Johnson & Johnson, alleging the company marketed to them for decades despite knowing its baby powder cause cancer.
Johnson & Johnson also said this week that creating LTL Management and filing for bankruptcy "are not a concession of liability" and instead is the best way to end the talcum lawsuits.
"We are taking these actions to bring certainty to all parties involved in the cosmetic talc cases," Johnson & Johnson attorney Michael Ullmann said in a statement. "While we continue to stand firmly behind the safety of our cosmetic talc products, we believe resolving this matter as quickly and efficiently as possible is in the best interests of the company and all stakeholders."
Linda Lipsen, one of the lawyers representing women with cancer claims, called Johnson & Johnson's move "an unconscionable abuse of the legal system."
"There are countless Americans suffering from cancer, or mourning the death of a loved one, because of the toxic baby powder that Johnson & Johnson put on the market that has made it one of the most profitable pharmaceutical corporations in the world," Lipsen said in a statement. "Their conduct and now bankruptcy gimmick is as despicable as it is brazen."