Title: Johnson & Johnson’s Bankruptcy Plan Denied: Talc Lawsuits Reenter Court
In a pivotal legal ruling, a U.S. bankruptcy court has rejected Johnson & Johnson’s (J&J) third attempt to address thousands of lawsuits via a contentious bankruptcy strategy. The decision effectively halts the company’s efforts to utilize a newly established subsidiary, Red River Talc, to insulate itself from ongoing litigation related to allegations that its talc products led to ovarian and other gynecological cancers.
This recent defeat represents the third occasion in as many years that courts have dismantled J&J’s approach to leveraging bankruptcy to constrain its liabilities in talc-related lawsuits. In each case, J&J created subsidiary companies intended to bear legal responsibility and subsequently filed for Chapter 11 bankruptcy protection for those entities—a maneuver plaintiffs and legal experts have labeled as an attempt to evade trial.
Background: The Formation of Red River Talc
Red River Talc was founded by Johnson & Johnson in September 2024 to take on the liabilities associated with over 90,000 lawsuits concerning its talc products. That same month, Red River sought bankruptcy protection in Texas, proposing an $8 billion settlement plan that J&J asserted had backing from approximately 83% of current claimants.
The goal of this process was to gain immunity from future lawsuits while providing a set amount of compensation to victims. A spokesperson for J&J mentioned that the settlement plan would be advantageous for both parties by offering claimants more swift relief than prolonged litigation and capping the company’s financial responsibility.
Nonetheless, critics contended that the establishment of such subsidiaries solely for the purpose of filing for bankruptcy represented a misapplication of the bankruptcy system.
Court Ruling and Legal Grounds
On March 31, U.S. Bankruptcy Judge Christopher Lopez dismissed the bankruptcy petition, voicing legal and ethical apprehensions. Judge Lopez’s ruling reinforced his previous conclusions as well as established legal precedents, including last year’s U.S. Supreme Court decision that rejected Purdue Pharma’s bankruptcy arrangement intended to resolve opioid crisis lawsuits. That ruling made it evident that companies cannot leverage the bankruptcy framework to evade litigation without adequate oversight and legitimate processes.
Judge Lopez conveyed profound skepticism regarding not only the credibility of the strategy but also the tactics J&J used to garner support from claimants for the settlement. “Even with some cases consolidated, it’s clear that claimants may pass away before juries ever hear their cases,” the judge pointed out, highlighting concerns over delayed justice due to procedural maneuvers.
J&J Withdraws Bankruptcy Proposal
In light of the court’s decision, Johnson & Johnson declared that it would abandon its bankruptcy initiative completely. In a public announcement, the company stated it would retract the $7 billion financial reserve allocated for bankruptcy settlements and would instead “return to the tort system” to contest what it described as “meritless talc claims.”
Erik Haas, J&J’s global vice president of litigation, asserted that the company maintains confidence in its capacity to succeed in court, noting a record of winning 16 out of the last 17 ovarian cancer trials over the past 11 years.
“We are more confident than ever,” Haas reiterated, underscoring the company’s intention to litigate these cases in conventional civil courts rather than pursue additional bankruptcy appeals.
Plaintiffs and Advocates Revel in Legal Win
For plaintiffs and their legal counsel, the court’s ruling signifies a major triumph. Andy Birchfield, leader of mass torts at Beasley Allen law firm, termed it a “victory for the claimants,” criticizing J&J’s bankruptcy endeavors as “a bad-faith tactic to elude full accountability.”
“This ruling corroborates our position all along. With this decision, we are now progressing promptly to trial, where our clients will finally have the opportunity to present their cases to a jury and secure the justice they deserve,” Birchfield declared.
Implications Ahead
The dismissal of J&J’s bankruptcy strategy sends a clear message to other companies considering similar tactics to handle mass tort liabilities. After several unsuccessful attempts to relieve its litigation burden through Chapter 11 filings, J&J now confronts the likelihood of defending itself in thousands of court proceedings across North America.
Legal analysts indicate that this ruling may discourage other firms from employing the so-called Texas two-step—a strategy of creating a subsidiary to absorb liabilities and subsequently file for bankruptcy—as a workaround for legal claims.
As the talc litigation returns to the conventional court system, the results of these trials will provide further insight into the future of corporate liability in mass tort situations. For now, plaintiffs await their opportunity for their cases to be heard, while Johnson & Johnson stands ready to rigorously defend its stance in court.