Otterbourg Helps Secure Victory for Official Committee of Talc Claimants in Multi-Billion Dollar Bankruptcy Filed by J&J Subsidiary
July 28, 2023
July 28, 2023
On July 28, 2023, the United States Bankruptcy Court for the District of New Jersey dismissed a second Chapter 11 filing by LTL Management, LLC (LTL), a subsidiary created by Johnson & Johnson (J&J). J&J created LTL using the controversial “Texas Two Step” maneuver shortly before LTL’s first bankruptcy filing in October 2021 in an effort to manage talc-related liabilities arising from claims that J&J’s talc containing products, most notably Johnson’s Baby Powder, causes certain kinds of cancer. Otterbourg served as co-lead counsel to the Official Committee of Talc Claimants (the Committee) appointed by the U.S. Department of Justice. The Committee represented by Otterbourg consists of ovarian cancer and mesothelioma victims who are plaintiffs in lawsuits against J&J and its affiliates, as well as an insurance carrier holding third party lien claims.
The Committee and several other co-movants moved to dismiss LTL’s Chapter 11 filing in April 2023. After extensive briefing, discovery, and a week-long trial in late June 2023, Chief Judge Michael Kaplan dismissed LTL’s second Chapter 11 filing. The Court adopted the Committee’s primary ground for dismissal, which was that LTL was not in immediate or imminent financial distress due to the $30 billion funding backstop it had from its parent, another J&J subsidiary.
In dismissing the case, the Court followed the precedent set by the United States Court of Appeals for the Third Circuit in the first LTL bankruptcy, in a case where Otterbourg also acted as co-lead counsel to the Official Committee then in existence. The Bankruptcy Court explained in this case: “Simply put, the debtor [LTL] does not meet the more exacting gateway requirement implemented by the [Third] Circuit with respect to ‘good faith’ under 11 U.S.C. §1112(b), which would allow LTL to take advantage of the tools available under the Bankruptcy Code to resolve its present and future talc liabilities.”
Melanie Cyganowski, retired Chief Bankruptcy Judge and Chair of Otterbourg’s Restructuring and Bankruptcy Department, said: “This ruling is incredibly powerful. First and foremost, it gives control back to the tens of thousands of women and men suffering from cancer as the alleged result of Johnson & Johnson talcum powder products to pursue their rights to trial by jury in the court system or, if they decide, to settle on terms of their choosing.” Otterbourg is honored to represent the Committee in obtaining this monumental victory for all talc claimants.
J&J has stated that it plans to appeal the widely reported decision.
Led by Melanie Cyganowski and Adam Silverstein, the Otterbourg trial team also included Jennifer Feeney, David Castleman, and Michael Maizel. Additional Otterbourg lawyers who contributed to the outcome include Richard Haddad, the Chair of Otterbourg’s Litigation Department, as well as lawyers Pauline McTernan, James Drew, John Bougiamas, Robert Yan, and Michael Pantzer.