J&J Talc Deal Should Be Rejected in Bankruptcy, Holdouts Say

By Steven Church and Jonathan Randles | January 28, 2025

Holdout creditors who claim tainted baby powder gave them ovarian cancer urged a judge to reject Johnson & Johnson’s plan to force an end to all related cancer lawsuits.

The proposed settlement — worth more than $8 billion — wrongly denies ovarian cancer victims the right to pursue their claims in court, lawyers for women who refused to join the deal said in a Friday objection. Holdouts also challenged a claim from J&J and its supporters that the settlement is backed by more than 80% of claimants.

Under the proposal, a bankrupt unit of the health care giant would establish a trust that would determine how much each cancer victim would get based on a set of detailed criteria. All lawsuits related to allegations that baby powder contained cancer-causing asbestos would be halted and instead resolved by the trust.

The proposal represents J&J’s third attempt since 2021 to use Chapter 11 to resolve talc litigation after federal appeals courts in Philadelphia blocked earlier efforts. J&J has maintained that its talc products are safe and said the bankruptcy settlement is part of a good-faith attempt to resolve the litigation for all stakeholders.

Friday’s objection was among several from various groups — including the US government — that have criticized J&J’s effort to put a shell company named Red River Talc into bankruptcy as a way to end the lawsuits. Typically, profitable companies that face no immediate threat of insolvency cannot clear their debts in bankruptcy.

After failed earlier attempts, J&J created Red River and last year put the company in bankruptcy. Next month, Red River and J&J are scheduled to be in court to try to convince a federal judge in Houston to approve the settlement plan.

For its latest bankruptcy, J&J organized a vote of claimants before filing the Chapter 11 case. After increasing its settlement offer to more than $8 billion, proponents said enough victims changed their votes from no to yes, giving the company enough support to meet a 75% threshold set by the bankruptcy code.

The proposed bankruptcy plan contains “a lengthy list of fatal flaws,” according to the holdouts, known as the Coalition of Counsel for Justice. The alleged flaws include:

  • No proof that there is enough money to pay the average ovarian cancer victim $100,000.
  • The proposed victim’s trust does not qualify for special bankruptcy rules that were originally designed to help reorganize companies that used asbestos in their products.
  • The voting process that J&J claims it won with more than 80% support was flawed and much of the tally must be corrected.

J&J disputed the coalition’s arguments, claiming that the proposal would give victims more money than they could get if they risked going to trial in front of a jury.

“The coalition has presented no meaningful alternative to get their clients a better recovery on any sort of realistic timeline,” Erik Haas, J&J’s head of litigation, said in an emailed statement.

The latest volley of challenges echo some arguments already raised by holdouts in pending bids to end J&J’s latest talc bankruptcy. Soon after J&J’s newest talc unit sought court protection in September, holdouts argued the company effectively “bought the votes” from women that should be dismissed by the judge.

Red River has denied that voting was flawed and contends that lawyers opposed to the bankruptcy settlement are motivated by their own financial interests to defeat the deal. Judge Christopher Lopez is scheduled to consider whether Red River’s case should proceed in February.

The bankruptcy case is Red River Talc LLC, 24-90505, US Bankruptcy Court for the Southern District of Texas (Houston).

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