- Bankruptcy judge rejects J&J's third attempt at $9B talc settlement
- Ruling cites improper claimant voting procedures in Chapter 11 process
- Company withdraws $7B reserve, vows to fight claims in civil courts
A Texas bankruptcy court has blocked Johnson & Johnson’s controversial strategy to resolve over 40,000 talc-related cancer claims through its subsidiary Red River Talc LLC. This marks the third failed bankruptcy maneuver since 2021, with Judge Christopher Lopez criticizing the structurally unfairvoting process that allegedly disadvantaged ovarian cancer victims. Legal analysts suggest the ruling could reshape how corporations approach mass tort liabilities.
The denied plan proposed compensating claimants through annual payments totaling $9 billion over 25 years. However, court documents reveal only 34% of mesothelioma victims participated in the critical ratification vote, compared to 95% participation from creditors. This imbalance led the court to question whether the settlement genuinely represented claimants’ interests.
Johnson & Johnson maintains its talc products remain safe, citing 150+ scientific studies. The healthcare giant now plans to reallocate $7 billion previously reserved for settlements to fund courtroom defenses. Industry observers note this reversal comes as 87% of U.S. product liability defendants now pursue subsidiary bankruptcies – a 210% increase since 2015.
Regional Impact: The Houston court’s decision contrasts with recent New Jersey rulings favoring corporate restructuring. Texas has emerged as a battleground state, handling 38% of all talc litigation since 2020. Local plaintiffs’ attorneys argue this ruling strengthens consumer protections in Southern District bankruptcy cases.
Market reactions were immediate, with J&J shares dropping 3.2% pre-market – equivalent to $12 billion in market value. The company continues facing 900+ new talc lawsuits monthly despite discontinuing talc-based baby powder in 2022. Consumer safety advocates warn the legal battle could persist through 2030, with total liabilities potentially exceeding $15 billion.