HomeBusinessJ&J Leads Losses on the Dow After Court Rejects Bankruptcy Plans

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.  

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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.


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