Courts, Congress Likely to Stand in Way of J&J’s Third Texas Two-Step Plan
Johnson & Johnson (NYSE: JNJ) faces significant challenges in its third attempt to use the 'Texas Two-Step' bankruptcy strategy to manage talc-related liabilities. The U.S. Court of Appeals for the 3rd Circuit recently rejected J&J's previous bankruptcy attempt, deeming it filed in bad faith. Additionally, bipartisan legislation, the Ending Corporate Bankruptcy Abuse Act (ECBA) of 2024, has been introduced to ban such maneuvers.
J&J faces a July 26 deadline for talc claimants to vote on a third bankruptcy attempt. Critics argue the proposed compensation unfairly shortchanges victims. The company needs 75% approval to proceed with another Texas Two-Step filing in Texas. Lawyers representing ovarian cancer victims urge J&J to abandon this strategy and provide fair compensation.
Johnson & Johnson (NYSE: JNJ) affronta sfide significative nel suo terzo tentativo di utilizzare la strategia di bancarotta 'Texas Two-Step' per gestire le responsabilità legate al talco. La Corte d'Appello degli Stati Uniti per il 3° Circuito ha recentemente respinto il precedente tentativo di bancarotta di J&J, giudicandolo presentato in mala fede. Inoltre, è stata introdotta una legislazione bipartisan, il Ending Corporate Bankruptcy Abuse Act (ECBA) del 2024, per vietare tali manovre.
J&J ha una scadenza del 26 luglio per i richiedenti di talco per votare su un terzo tentativo di bancarotta. I critici sostengono che il risarcimento proposto danneggi ingiustamente le vittime. L'azienda ha bisogno dell'approvazione del 75% per procedere con un'altra richiesta di bancarotta Texas Two-Step in Texas. Gli avvocati che rappresentano le vittime di cancro ovarico esortano J&J ad abbandonare questa strategia e a fornire un risarcimento equo.
Johnson & Johnson (NYSE: JNJ) enfrenta importantes desafíos en su tercer intento de utilizar la estrategia de bancarrota 'Texas Two-Step' para gestionar las responsabilidades relacionadas con el talco. La Corte de Apelaciones de EE. UU. para el 3er Circuito rechazó recientemente el intento previo de bancarrota de J&J, considerándolo presentado de mala fe. Además, se ha introducido una legislación bipartidista, la Ending Corporate Bankruptcy Abuse Act (ECBA) de 2024, para prohibir tales maniobras.
J&J tiene un plazo del 26 de julio para que los reclamantes de talco voten sobre un tercer intento de bancarrota. Los críticos argumentan que la compensación propuesta perjudica injustamente a las víctimas. La empresa necesita la aprobación del 75% para proceder con otra solicitud de bancarrota Texas Two-Step en Texas. Los abogados que representan a las víctimas de cáncer de ovario instan a J&J a abandonar esta estrategia y a proporcionar una compensación justa.
존슨 & 존슨 (NYSE: JNJ)은 탈크 관련 책임을 관리하기 위해 '텍사스 투 스텝' 파산 전략을 사용하려는 세 번째 시도에서 중대한 도전에 직면해 있습니다. 미국 제3 항소법원은 최근 J&J의 이전 파산 시도를 악의적으로 제출한 것으로 간주하며 기각했습니다. 또한 이러한 조작을 금지하는 2024년 기업 파산 남용 종식 법안 (ECBA)라는 초당적 법안이 도입되었습니다.
J&J는 7월 26일까지 탈크 청구인들이 세 번째 파산 시도에 대해 투표할 기한이 있습니다. 비평가들은 제안된 보상이 희생자들에게 불공정하게 부족하다고 주장하고 있습니다. 이 회사는 텍사스에서 또 다른 텍사스 투 스텝 신청을 진행하기 위해 75%의 승인이 필요합니다. 난소암 피해자를 대표하는 변호사들은 J&J에게 이 전략을 포기하고 공정한 보상을 제공할 것을 촉구하고 있습니다.
Johnson & Johnson (NYSE: JNJ) fait face à d'importants défis dans sa troisième tentative d'utiliser la stratégie de faillite 'Texas Two-Step' pour gérer les responsabilités liées au talc. La Court d'Appel des États-Unis pour le 3ème Circuit a récemment rejeté la précédente tentative de faillite de J&J, la jugeant déposée de mauvaise foi. En outre, une législation bipartite, le Ending Corporate Bankruptcy Abuse Act (ECBA) de 2024, a été introduite pour interdire de telles manœuvres.
J&J a une date limite du 26 juillet pour que les demandeurs de talc votent sur une troisième tentative de faillite. Les critiques soutiennent que l'indemnisation proposée désavantage de manière injuste les victimes. L'entreprise a besoin d'une approbation de 75 % pour procéder à un autre dépôt de Texas Two-Step au Texas. Les avocats représentant les victimes du cancer de l'ovaire exhortent J&J à abandonner cette stratégie et à fournir une indemnisation équitable.
Johnson & Johnson (NYSE: JNJ) steht vor erheblichen Herausforderungen in seinem dritten Versuch, die 'Texas Two-Step'-Insolvenzstrategie zur Verwaltung von haftungsbedingten Verpflichtungen im Zusammenhang mit Talk zu nutzen. Das US-Berufungsgericht für den 3. Circuit hat den vorherigen Insolvenzantrag von J&J kürzlich als in böser Absicht eingereicht zurückgewiesen. Darüber hinaus wurde ein parteiübergreifendes Gesetz, das Ending Corporate Bankruptcy Abuse Act (ECBA) von 2024, vorgestellt, um solche Manöver zu verbieten.
J&J hat eine Frist bis zum 26. Juli, in der die Talk-Anspruchsteller über einen dritten Insolvenzantrag abstimmen können. Kritiker argumentieren, dass die vorgeschlagene Entschädigung die Opfer ungerecht behandelt. Das Unternehmen benötigt eine Zustimmung von 75%, um einen weiteren Texas Two-Step-Antrag in Texas einzureichen. Anwälte, die die Opfer von Eierstockkrebs vertreten, fordern J&J auf, diese Strategie aufzugeben und eine faire Entschädigung anzubieten.
- None.
- U.S. Court of Appeals for 3rd Circuit rejected J&J's previous bankruptcy attempt
- Bipartisan legislation introduced to ban the Texas Two-Step bankruptcy strategy
- Proposed compensation plan criticized for unfairly shortchanging victims
- Potential failure to secure 75% approval for third bankruptcy attempt
- Ongoing legal challenges and negative public perception
Insights
The recent developments in Johnson & Johnson's (J&J) talc litigation saga mark a significant setback for the company's legal strategy. The U.S. Court of Appeals for the 3rd Circuit's decision to reject J&J's 'Texas Two-Step' bankruptcy maneuver for the second time underscores the judiciary's growing skepticism towards such corporate tactics. This ruling, coupled with the introduction of the bipartisan Ending Corporate Bankruptcy Abuse Act (ECBA) of 2024, signals a potential sea change in how courts and legislators view corporate attempts to use bankruptcy as a shield against mass tort liabilities.
The court's finding that LTL Management's bankruptcy filing was made in bad faith due to lack of financial distress is particularly noteworthy. It sets a precedent that could deter other large corporations from employing similar strategies. The proposed ECBA legislation, if passed, would create an even more formidable barrier against such maneuvers by establishing a presumption of bad faith for Texas Two-Step bankruptcies.
From a legal perspective, J&J's third attempt at a Texas Two-Step bankruptcy faces significant hurdles. The 75% approval threshold for the settlement plan is a high bar, especially given the growing opposition and scrutiny. Even if J&J secures the votes, the recent court rulings and potential legislative changes cast doubt on the viability of this strategy.
The lack of court supervision in the voting process raises serious questions about the fairness and transparency of the procedure. This could potentially open up avenues for legal challenges to the validity of the vote itself, regardless of the outcome.
In light of these developments, J&J may need to reassess its legal strategy. The mounting legal and legislative pressure could push the company towards considering more traditional settlement approaches or facing the prospect of individual trials, which could potentially result in higher overall costs and reputational damage.
The ongoing talc litigation saga presents significant financial implications for Johnson & Johnson. The company's market capitalization of approximately
J&J's persistent attempts to use the Texas Two-Step bankruptcy strategy suggest that the company views the potential liability as material to its financial position. While the exact liability is uncertain, estimates have ranged from
From an investor's perspective, the uncertainty surrounding this litigation poses a risk to J&J's stock price and dividend stability. The company's legal troubles have already led to a
Moreover, the ongoing negative publicity could have indirect financial consequences by damaging J&J's brand value, potentially affecting sales of its consumer health products. This is particularly relevant given the recent spin-off of its consumer health division into Kenvue.
The financial markets will be closely watching the outcome of the July 26 vote and any subsequent legal developments. A failure to secure the required
The ongoing talc litigation saga involving Johnson & Johnson (J&J) has broader implications for the pharmaceutical and consumer goods industries. This case is being closely watched as it could set precedents for how large corporations handle mass tort liabilities.
From a market perspective, J&J's struggles are likely to prompt other companies facing similar issues to reassess their legal and financial strategies. The potential legislative action against the Texas Two-Step bankruptcy maneuver could have far-reaching effects, closing off a controversial but potentially effective tool for managing large-scale liabilities.
This situation also highlights the growing importance of Environmental, Social and Governance (ESG) factors in corporate valuation. J&J's handling of the talc issue, particularly its attempts to use bankruptcy proceedings, may be viewed negatively by ESG-focused investors. This could lead to a reassessment of J&J's ESG ratings, potentially affecting its attractiveness to certain institutional investors and ESG-focused funds.
Moreover, the ongoing litigation and negative publicity could impact consumer perceptions of J&J's brand. While the company has a diverse product portfolio beyond talc-based products, persistent negative associations could affect consumer trust and loyalty across its range of consumer health products.
Looking ahead, this case may prompt increased scrutiny of product safety and corporate responsibility across the industry. Companies may need to invest more in product testing, safety measures and transparent communication to mitigate similar risks. This could lead to increased costs but may also present opportunities for companies that can effectively demonstrate their commitment to consumer safety and corporate responsibility.
For investors, this situation underscores the importance of considering litigation risk and corporate governance issues when evaluating pharmaceutical and consumer goods companies. It also highlights the potential for regulatory changes that could affect how companies manage and disclose potential liabilities.
“The third time will not be the charm for J&J,” says Andy Birchfield, head of the Mass Torts Litigation Section at the Beasley Allen Law Firm, who has been instrumental in helping to foil the first two attempts at bankruptcy by the half-trillion-dollar company. “Recent developments in the courts and in Congress should convince J&J to abandon its strategy and act as a responsible corporation by providing truly fair and reasonable compensation in a non-coercive resolution.”
On Thursday, the
Earlier this week, a bipartisan group of congressional lawmakers led by Sen. Josh
“Johnson & Johnson has brought this legislative action upon itself by flouting the law and arrogantly pushing a failed strategy,” says Leigh O’Dell, co-lead counsel for consolidated multidistrict litigation. “The courts and Congress are saying that J&J is not entitled to use the powerful tools of bankruptcy to strip away the rights of cancer victims.”
Friday July 26 is the deadline for talc claimants to approve or reject a third J&J bankruptcy attempt. A settlement plan aimed at ending the litigation must receive
“For J&J to lose this vote would be akin to Vladimir Putin losing a Russian election,” says Mr. Birchfield. “J&J controls the ballot. J&J determines who can vote and all the rules for voting. J&J controls the agent that counts the ballots and determines which votes will be counted and which ones will be discarded. And this is all done without court supervision.
“However, there is a vast difference between winning the vote through ballot stuffing and succeeding with a bankruptcy plan. This will be J&J’s third attempt to use bankruptcy to shirk its responsibility for its asbestos-laden talc-based baby powder. The egregiousness of J&J’s scheme to use bankruptcy to evade accountability and cap its liability has prompted bipartisan congressional action with a bill that would curb the abuse of J&J’s Texas Two Step.”
Beasley Allen is one of the country’s leading civil litigation firms, holding several national records for verdicts and settlements.
View source version on businesswire.com: https://www.businesswire.com/news/home/20240726363190/en/
Mike Androvett
mike@androvett.com
214-507-5456
Source: Beasley Allen Law Firm
FAQ
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