Johnson & Johnson (J&J) is preparing to add an additional $1.1 billion to its proposed settlement to resolve tens of thousands of lawsuits alleging its talc-based baby powder and other products caused cancer.
The increase would bring the total size of the settlement to more than $9 billion. Sources say this would be paid over a period of 25 years.
The healthcare giant has faced widespread litigation over the safety of its talc products. It announced on Wednesday it reached an agreement with a plaintiffs’ lawyer representing 12,000 clients.
The lawyer, Allen Smith, has agreed to recommend J&J’s settlement offer to his clients, building on the support already garnered from other claimants.
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Bankruptcy Strategy and Settlement Terms
J&J plans to have a subsidiary declare bankruptcy to finalize the settlement. The parent company itself will not file for Chapter 11.
The proposed deal is expected to conclude before the end of the month, though the timing could shift depending on the vote count.
The company maintains its talc products are safe and do not cause cancer.
J&J’s latest settlement offer is part of a legal maneuver known as the “Texas two-step” bankruptcy,. This will see the company shift its talc liabilities to a newly created subsidiary that files for Chapter 11 bankruptcy.
This allows J&J to consolidate claims and propose a single settlement without filing for bankruptcy itself.
The current offer focuses primarily on claims involving ovarian and other gynecological cancers. These make up the majority of lawsuits against J&J.
It does not address claims from plaintiffs who allege that asbestos-laced talc caused mesothelioma, a rare and deadly form of cancer. J&J continues to insist its talc does not contain asbestos.
Claimant Support and Opposition
With Smith’s endorsement, J&J is expected to secure over 75 percent of claimants’ support, a legally required threshold for a judge to approve the bankruptcy settlement.
J&J faces lawsuits from more than 62,000 plaintiffs. However, the total could be as high as 100,000, according to the company’s vice president of litigation, Erik Haas.
Despite the momentum, some attorneys representing cancer victims remain staunchly opposed to the settlement.
Andy Birchfield, a leading opponent of J&J’s plan, said a “substantial number” of clients represented by his law firm, under a joint agreement with Smith, have already rejected the settlement offer.
Birchfield vowed to continue fighting the proposed bankruptcy resolution alongside other attorneys.
Legal and Financial Implications
J&J has described its settlement offer as having a net present value of approximately $6.48 billion, with actual cash payments over the next 25 years totaling $8 billion.
The additional $1.1 billion in planned payments would bring the final figure above $9 billion.
The ongoing legal battle marks J&J’s third attempt to resolve talc-related litigation through bankruptcy.
The company has been rebuffed twice by federal courts in previous attempts to use the Texas two-step strategy.
However, it remains committed to pursuing this legal route as it seeks to bring the litigation to a close.