Despite two previous failed attempts, Johnson & Johnson is now pursuing bankruptcy for a third time according to an earnings call accessed by Law360. In the call, a representative for the consumer conglomerate suggested this latest attempt would conclude in the resolution of the thousands of claims that allege that their recalled talc products caused ovarian cancer, cervical cancer, and mesothelioma.

On October 17, during a third-quarter earnings call, Johnson & Johnson’s worldwide vice president of litigation, Erik Haas, stated that the company would once again be putting its subsidiary LTL Management into bankruptcy for a third time. LTL was initially created through a controversial process known as a divisive merger in which a corporation divides itself into two or more entities. Johnson & Johnson executed this maneuver and, through a series of corporate maneuvers, saddled the fledgling subdivision it created with all responsibility and liability for their talcum powder lawsuits. That subdivision was LTL Management. Two days after LTL was created, Johnson & Johnson plunged the subdivision into Chapter 11 bankruptcy proceedings in an effort to stop the lawsuits arrayed against it.

The bankruptcy case proceeded in the U.S. Bankruptcy Court for the District of New Jersey under the supervision of Judge Michael B. Kaplan. Eventually, Johnson & Johnson’s first bankruptcy failed with the ultimate reasoning being that even though LTL may have been in financial distress from the theoretical weight of the talc lawsuits against it, the parent company, Johnson & Johnson, is not in financial distress and should be able to absorb the financial impacts of the litigation and assist its subdivision. 

In the wake of that decision, Johnson & Johnson immediately applied for bankruptcy protection a second time, this time significantly increasing the proposed settlement amount that plaintiffs would receive if they accepted the conglomerate’s terms. Again the plaintiffs argued, successfully, that Johnson & Johnson was not genuinely in need of bankruptcy protections and the second bankruptcy attempt was quashed for the exact same reason as the first. 

However, now Johnson is announcing this third bankruptcy process as part of a two-pronged attempt to handle the lawsuits arrayed against it. On the one hand, this third bankruptcy attempt is an attempt to foist an $8.9 billion settlement onto the plaintiffs. On the other hand, the company is also holding out hope that the appellate court decisions to dismiss the previous bankruptcies will be overturned by the U.S. Supreme Court.

Despite the two previous failed attempts, Johnson & Johnson is claiming that this latest attempt is in keeping with the New Jersey bankruptcy court’s suggested actions in order to theoretically give this bankruptcy case a better chance of succeeding. According to Vice President Haas, a vote will be forthcoming in the next six months to determine whether a supermajority of plaintiffs will support the plan.

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