J&J proposes $6.5B payout, reorganization to resolve talc cancer claims

J&J reorganization overview: 

• Who: Johnson & Johnson proposed a $6.5 billion plan to settle claims regarding its talc-based powder.
• Why: The settlement benefits consumers who claim the talc caused ovarian cancer.
• Where: The J&J reorganization is in front of bankruptcy court in New Jersey.

Johnson & Johnson (J&J) proposed a $6.5 billion plan to settle claims regarding its talc-based powder in a third attempt to reorganize the company through bankruptcy.

The J&J reorganization plan requires a supermajority of at least 75% of the ovarian cancer claimants to agree to the deal. The talc cancer settlement would pay $6.5 billion over 25 years to resolve 99.75% of all pending talc lawsuits while putting LTL Management into bankruptcy, Law360 reports.

The deal is a “far better recovery than what claimants stand to recover at trial,” Law 360 says Erik Haas, J&J worldwide vice president of litigation, stated in an investor call.

J&J has won 95% of the cases that have reached trial but, at the current rate, it would take decades for all of the cases to be heard, Haas reportedly said. That means many of the cases would never reach court.

Claimants have 3 months to vote on plan, which Beasley Allen opposes

Claimants have three months to vote to approve the plan.

“Let the claimants vote and decide whether this is in their best interests,” Haas said, according to Law360. “We never got there because of a very small vocal contingent of plaintiffs lawyers who prevented that vote from happening.”

Haas said the Beasley Allen Law Firm, which represents the plaintiffs, is the main opposition to the plan, Law360 reports.

“We believe any bankruptcy based on this solicitation and vote will be found fraudulent and filed in bad faith under the Bankruptcy Code,” Andy Birchfield of Beasley Allen reportedly told Law360. “On behalf of our clients who deserve better, we are blowing the whistle on this cynical legal tactic and will resist it at every turn.”

Johnson & Johnson agreed to pay $700 million in January to settle investigations from 42 states and the District of Columbia into whether the company misled customers with the marketing of its talc products.

Did you use Johnson & Johnson talc powder? Let us know in the comments.

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