Recently, the Department of Justice (DOJ) took a firm stand against giant pharmaceutical company Johnson & Johnson (J&J) after the company tried to file for bankruptcy again. Johnson & Johnson is facing mesothelioma and ovarian cancer lawsuits from tens of thousands of victims who blame the asbestos-contaminated talc in the company’s famous baby powder for their illness. To address these claims, J&J has repeatedly attempted a controversial strategy of filing for bankruptcy. Many people thought that J&J’s latest bankruptcy filing attempt would succeed. However, the DOJ intervened in the case and filed a motion to dismiss the company’s bankruptcy case.
Johnson & Johnson has followed in the footsteps of many asbestos companies facing lawsuits from mesothelioma and ovarian cancer victims. The pharmaceutical giant has filed for bankruptcy a number of times in an attempt to settle the tens of thousands of claims it is facing. All the claimants blame the company’s talc-based baby powder for their illness. They claim that the baby powder was contaminated with asbestos, a substance that is known to cause various illnesses, including mesothelioma and ovarian cancer. However, according to the U.S. Trustee, Johnson & Johnson is trying to abuse the bankruptcy system. The Trustee noted that J&J’s bankruptcy filing differs from standard asbestos trust funds since the company is not in need of bankruptcy relief. The Trustee noted that J&J is not in genuine financial distress.
Johnson & Johnson’s strategy involves filing for bankruptcy through a subsidiary called Red River Talc LLC. Pointing to this subsidiary, the U.S. Trustee said that it serves no legitimate purpose and seems solely designed to protect J&J, a company that is financially stable and cannot provide a conformable plan of reorganization. This is Johnson & Johnson’s third time attempting to file for Chapter 11 bankruptcy, a bankruptcy chapter that is meant for companies facing genuine financial distress. According to the Trustee, this third filing is no different from the previous filings that the court rejected for similar reasons.