:max_bytes(150000):strip_icc()/GettyImages-837182306-b54197eb4c3e4607988dbb4865d2e049.jpg "J&J Leads Losses on the Dow After Court Rejects Bankruptcy Plans")
Key Takeaways
- Johnson & Johnson shares dropped after a judge ruled against its plan to resolve talcum powder-related lawsuits.
- The court rejected for a second time the proposal to allow a subsidiary that took on the liabilities to declare bankruptcy.
- J&J said it would appeal the decision and defend itself against the lawsuits.
Johnson & Johnson (JNJ) was the worst-performing stock in the Dow after the pharmaceutical and medical device maker failed for a second time to get a court’s approval to handle talcum powder-related liability claims through bankruptcy.
U.S. Bankruptcy Court Judge Michael Kaplan in New Jersey rejected the company’s proposal, ruling the lawsuits didn’t put the firm in immediate “financial distress.”
J&J has been sued by thousands of plaintiffs who claim its talcum powder caused them to develop cancer because it contained asbestos. The company planned to handle them by letting a new subsidiary, LTL Management, assume liabilities and declare bankruptcy. LTL would then pay $8.9 billion in settlements, which would end any future liability.
That move in 2021 was challenged by some plaintiffs and turned down by a Philadelphia court earlier this year. LTL tried again, claiming more plaintiffs were in favor. However, Judge Kaplan said he saw no reason why LTL needed Chapter 11 relief.
J&J indicated LTL would appeal the ruling and the company would defend itself vigorously against the lawsuits, which it called “specious and without merit.”
Shares of Johnson & Johnson fell close to 4% on Monday following the news, and have been in negative territory for most of 2023.
YCharts
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