Johnson & Johnson is making its third attempt to resolve tens of thousands of lawsuits alleging its baby powder and other talc products cause cancer, with its subsidiary, Red River Talc, filing for bankruptcy in the U.S. Bankruptcy Court for the Southern District of Texas. This move is part of an $8 billion proposed settlement to end litigation, with J&J denying allegations that its products are contaminated with asbestos and cause ovarian and other cancers.
The company faces lawsuits from over 62,000 claimants, but has secured support from about 83% of current claimants for the proposed bankruptcy plan ¹. J&J’s strategy, known as the “Texas two-step” bankruptcy, involves offloading its talc liability onto a newly created subsidiary that declares Chapter 11, allowing the company to avoid filing for bankruptcy itself.
This approach enables bankruptcy judges to enforce global settlements, permanently halting related lawsuits and forbidding new ones. Outside of bankruptcy, J&J would remain exposed to potential multibillion-dollar verdicts. To improve its chances, J&J solicited plaintiff votes ahead of time, securing over 75% support required for a bankruptcy judge to impose the deal.
Notably, J&J’s third attempt focuses solely on ovarian and other gynecological cancer claims, building on previous settlements with state attorneys general and mesothelioma victims. However, the company faces opposition from lawyers and legal hurdles, including a June U.S. Supreme Court decision and proposed federal legislation aimed at preventing financially healthy companies like J&J from benefiting from bankruptcy protection.
