Johnson & Johnson Considering Plan To Put Talc Liabilities Into Bankruptcy : Report

(RTTNews) - Johnson & Johnson (JNJ) is considering a plan to put liabilities from Baby Powder litigation into a newly created business that would then seek bankruptcy protection, Reuters reported on Sunday citing people familiar with the matter.

The plan would allow the company to potentially pay out lower settlements through the smaller company, the report said.

Johnson & Johnson, which has about $443 billion market capitalization, could use a merger law in Texas that allows a company to split into at least two entities. For J&J, that could create a new entity housing talc liabilities that would then file for bankruptcy to halt litigation, the report said.

The report noted that Johnson & Johnson has not made a decision on whether it will pursue the bankruptcy plan.

Johnson & Johnson is currently facing thousands of lawsuits and allegations that the contaminated product caused cancer.

The Supreme Court in June rejected the company's appeal to review the $2.14 billion reparations awarded against the company in June 2020.

The original verdict of $4.7 billion was awarded by a Missouri jury in 2018 after 22 women blamed Johnson and Johnson for using asbestos in their talcum powders and baby products, which has led to their ovarian cancer.

While the amount of the verdict was reduced to $2.14 billion, the present amount is going to stay unchanged as the company is entangled in 21,800 cases regarding the same issue. The company said that it has already rolled back the baby-powders due to the allegations and has been facing a drop in demand due to the filings.

Recently, Johnson & Johnson recalled five of its aerosol sunscreen products after the sprays were found to contain low levels of the chemical benzene.

Benzene is classified as a human carcinogen, a substance that could potentially cause cancer depending on the level and extent of exposure.

Johnson & Johnson in June reportedly agreed to pay hundreds of millions of dollars to settle opioid lawsuits filed in New York accusing the company of mishandling the highly addictive painkillers. The settlement resolved cases brought by New York State Attorney General Letitia James and two Long Island counties.

The drugmaker agreed to stop selling opioids nationwide.

The opioid crisis refers to the extensive overuse of opioid medications, both from medical prescriptions and from illegal sources. The crisis began in the United States in the late 1990s, when opioids were increasingly prescribed for pain management and resulted in a rise in overall opioid use throughout subsequent years.

From 1999 to 2017, more than 399,000 people reportedly died from drug overdoses that involved prescription and illicit opioids.