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Johnson & Johnson subsidiary seeks bankruptcy protection to settle talc product claims

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Johnson & Johnson announced Thursday that a subsidiary it recently created to manage claims that its talc-based products cause cancer has filed for bankruptcy protection.

The company said in a statement it hoped filing for Chapter 11 protection would help resolve current and future claims “in a manner fair to all parties.”

J.&J. said it would provide funds to the subsidiary for all amounts owed according to the bankruptcy court, creating a $2 billion trust for that purpose. Certain royalty income streams have been allocated to the subsidiary to pay for any future costs, it added.

Andy Birchfield, an attorney for the Beasley Allen Law Firm, which has worked on lawsuits against Johnson & Johnson, said in a statement that the firm’s filing was an “attempt to hide behind bankruptcy.”

“This stinks,” he said. “J.&J. can run, but it cannot hide.”

mr. Birchfield compared the filing to similar moves by the Boy Scouts of America and USA Gymnastics, which also filed for bankruptcy this year as they faced legal claims.

“Here’s another example of the rich and powerful using bankruptcy as a shelter to protect their profits and evade responsibility,” he said. “The entire nation, Congress and more than 30,000 victims of J.&J.’s dangerous talc product are saying ‘no’ to this blatant and fraudulent abuse of the bankruptcy system.”

Michael Ullmann, executive vice president and general counsel at Johnson & Johnson, said the company “continues to stand firmly behind the safety of our cosmetic talc products.”

“We are taking these steps to provide assurance to all parties involved in the cosmetic talc business,” he said in a statement.

The move is the latest twist in the saga of the company’s talc-based products, including its iconic baby powder. Johnson & Johnson stopped selling the product in North America last year as the company faces thousands of lawsuits filed by customers who say the products cause cancer.

Its subsidiary, LTL Management, will now bear the brunt of the claims, the company said. Johnson & Johnson itself and its other subsidiaries have not filed for bankruptcy protection and “will continue to operate as usual,” it said.

John Kim, LTL’s Chief Legal Officer, said in a statement that with the financial backing of the parent company, the subsidiary was assured that all parties will be treated equally during this process.

Johnson & Johnson said its filing was “not a concession of liability, but rather a means of reaching a fair and efficient resolution of the claims made in the cosmetic talc litigation process.”

While it prevailed in some cases, the company has suffered significant losses in court over other claims. In June, a Missouri court of appeals ordered the company to pay $2.1 billion in damages to women who said the company’s talc products, including the baby powder, caused their ovarian cancer.

In 2018, Johnson & Johnson had to pay $4.69 billion to 22 women and their families who said they developed ovarian cancer from asbestos in the company’s talcum powder products.

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