J&J Mulls Bankruptcy Ploy In Baby Powder Lawsuits

Reuters reports:

Johnson & Johnson is exploring a plan to offload liabilities from widespread Baby Powder litigation into a newly created business that would then seek bankruptcy protection, according to seven people familiar with the matter.

J&J is now considering using Texas’s “divisive merger” law, which allows a company to split into at least two entities. For J&J, that could create a new entity housing talc liabilities that would then file for bankruptcy to halt litigation, some of the people said.

The maneuver is known among legal experts as a Texas two-step bankruptcy, a strategy other companies facing asbestos litigation have used in recent years.

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EXCLUSIVE J&J exploring putting talc liabilities into bankruptcy-sources https://t.co/6quXUg8nlI pic.twitter.com/z6o64nAWsk

— Reuters (@Reuters) July 18, 2021