It was reported on Monday that a Johnson & Johnson subsidiary was accused of trying to use the bankruptcy process to withdraw lawsuits over their baby powder. There is some speculation that it causes cancer.
The subsidiary, LTL Management, chose the bankruptcy strategy as a way to reach a fair resolution of 38,000 lawsuits claiming that J&J's talc-based products cause cancer including mesothelioma. The company, though, stands firm on its point: the products are safe.
The core of J&J's strategy is the Texas two-step. It is a Texas law that allows corporations to found a new company that will undertake hardships and obligations instead of the parent company. The new company gets separated from the founder and declares itself bankrupt. This allows companies to resolve issues with plaintiffs, avoiding a jury trial and heavy financial losses.
According to the plaintiffs' lawyers, the LTL bankruptcy filing allows J&J to limit payments to victims to $2 billion. One of the lawyers called the move a rotten and deceitful one.
Robert Wuesthoff, president of LTL Management said the lawsuits would not be taken to court. By the way, before J&J founded its subsidiary, it had 10 talc trials a year.
He added that most cancer plaintiffs might accept payments offered in bankruptcy, rather than hope to be among the few who could receive extraordinary payments.
According to some reports, last year the company launched Project Plato, which functioned as a pack mule: to undertake the liabilities of the parent company and file for bankruptcy.
Many companies misuse the Texas two-step. Hence, in July 2021, the House of Representatives proposed a bill blocking this move.
Michael Kaplan, a U.S. bankruptcy judge, set a five-day court session to review a bid to close the bankruptcy case. The court's decision is expected to be announced by the end of the month.
As reported on Monday, J&J resolved 6,846 "talc" cases. The settlement totaled $966 million. This happened before LTL was formed.
According to Brian Glasser, a lawyer representing the plaintiffs, if all 38,000 talc cases had been settled, the company would have been obliged to pay $5.5 billion. That wouldn't be a financial hit for such a big company.
Shares of J&J ended down 1.3% at $165.60.
While J&J is waiting for the LTL's bankruptcy proceedings outcome, the talc lawsuits are paused.
The company stopped baby powder sales in the U.S. and Canada in May 2020, partly due to what it described as "misinformation" and " unfounded allegations" about the talc-based product.
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市場對美國國際貿易法院的裁決作出反應,該裁決認為特朗普政府的關稅措施超出了其權力範圍。此決定為S&P 500帶來了新的不確定性,因為投資者正在評估關稅回撤的潛在影響。
S&P 500指數突破了關鍵的5,908點位,這標誌著近期修正的結束,並為進一步的上升打開了空間。若突破5,998的阻力位,將為漲勢提供額外的動力。
美國總統唐納德·特朗普宣布對歐盟進口商品徵收50%關稅,但金融市場的反應較為克制。投資者越來越多地採取“威脅與撤退”策略,看到大膽聲明(經常未能實現)後反而買入股票。
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