Report: Johnson & Johnson Using Bankruptcy Process to Deny Injured Victims Compensation

In 2020, Johnson & Johnson (J&J) stopped selling talc-based baby powder in the United States. The product has been linked to an increased risk of cancer and the company has faced many lawsuits. According to a report from National Public Radio (NPR), the multi-billion dollar corporate giant is now using a bankruptcy tactic to try to block injured victims from recovering compensation. Here, our Portland personal injury lawyer provides an overview of talcum powder claims, J&J bankruptcy maneuver, and bankruptcy grifting in general.

Talcum Powder Associated With Increased Cancer Risk 

J&J’s baby powder was one of the most common consumer products in the country. In recent years, serious questions were raised about the safety of it and other talc-based baby powders. U.S. product safety regulators detected not-insignificant amounts of carcinogenic chrysotile fibers—essentially a form of asbestos—in the product. Talc baby powders have been linked to an increased risk of cancer.

Johnson & Johnson, Bankruptcy, and Baby Powder (Talc) Claims 

Forbes Magazine reports that nearly 40,000 talcum powder injury lawsuits have been filed against Johnson & Johnson. Of course, J&J is a company with deep pockets—its total value is more than $400 billion. However, the corporation is using a controversial bankruptcy strategy in an attempt to sidestep liability in the dangerous baby powder claims.

Here is an explanation. In October of 2021, J&J created a subsidiary company in Texas called LTL Management LLC. In effect, J&J then transferred its talc-based baby powder business—and the corresponding legal liability—into the ownership of this subsidiary company. Shortly thereafter, LTL Management filed for Chapter 11 bankruptcy protection. 

In other words, one of the wealthiest corporations in the United States is trying to protect the vast majority of its assets by effectively using the bankruptcy process to “segment off” a portion of its business. In doing so, the company is dramatically limiting the amount of financial compensation available for cancer victims and their families.

Bankruptcy Grifters: How Big Companies Use Bankruptcy Tactics to Block Lawsuits

An academic article published in The Yale Law Journal calls the strategy that Johnson & Johnson is employing in this case “bankruptcy grifting.” The bankruptcy process exists for a reason. It allows individuals and businesses to restructure overly burdensome debt. That being said, the article emphasizes that there are flaws in our current bankruptcy code—and bankruptcy grifting occurs when a solvent company uses the bankruptcy process in an effort to deny injured victims compensation that could be paid. It is a serious matter of concern and legal reforms are likely necessary to ensure that companies with deep pockets cannot use bankruptcy tactics to escape liability.

We Fight for the Rights of Injured Victims and their Families

At The Johnston Law Firm, LLC, our Portland injury & accident lawyers are strong advocates for justice. You need compensation to pay your bills—and large corporations and their insurers must be held accountable. Call us at (503) 546-3167 or contact us online to set up your free consultation. From our office in Portland, we represent victims and their families throughout Oregon.