Johnson & Johnson is digging ever deeper into its coffers, planning to pay an additional $1.1bn to resolve tens of thousands of lawsuits alleging its baby powder and other talc products caused cancer – and boosting the size of the settlement to more than $9bn paid over 25 years.
Last week J&J said it reached an agreement with a lawyer representing 12 000 clients to recommend the settlement offer to them, adding to support already received from other claimants.
A source told Reuters that the company is preparing to have a subsidiary declare bankruptcy to finalise the proposed settlement before the end of this month and that it would continue operating without filing for Chapter 11.
The timing of a bankruptcy filing could change depending on how the counting of additional votes unfolds.
J&J said Allen Smith, the plaintiffs’ lawyer now supporting its plan, agreed to the settlement offer in exchange for “additional monetary and non-monetary benefits for all claimants” in a bankruptcy plan it expects a judge to later approve.
The company declined to comment on the amount of additional money it plans to pay and did not respond to an inquiry regarding the timetable for a subsidiary filing for bankruptcy protection.
Earlier this year, J&J gave claimants until 26 July to vote on its proposed bankruptcy settlement. In August, it then extended the deadline at the request of plaintiffs’ lawyers.
The current settlement offer is “the best and most realistic option available for claimants to recover for their claims in a timely manner”, Smith said last week.
With votes from Smith’s clients, J&J expects to garner support from more than 75% of claimants alleging the company’s talc made them ill. Support from 75% of claimants is the legally required threshold for a judge to approve the kind of bankruptcy settlement J&J has proposed.
The additional votes will put J&J “well above” that bar, the company said.
J&J faces talc lawsuits from more than 62 000 plaintiffs, according to a company filing. But the figure swells as high as 100 000 when counting claimants who haven’t sued.
Some lawyers representing cancer victims oppose J&J’s plan to resolve the litigation and are locked in a bitter battle with the company.
Andy Birchfield, one of the leading opponents, said his law firm shares representation of a “substantial number” of clients with Smith through a joint agreement. Those clients have already “overwhelmingly rejected” J&J’s settlement offer and Birchfield will continue opposing the company’s bankruptcy plan alongside other attorneys, he said.
J&J has previously described its settlement offer as having a net present value of about $6.48bn with the amount of actual cash paid over 25 years totalling $8bn. The increased payout J&J is planning inflates the latter figure to above $9bn.
The latest settlement offer addresses allegations that talc caused ovarian and other gynaecological cancers, which are the bulk of the claims faced by the company.
It excludes other claims, including those from plaintiffs alleging asbestos-laced talc caused their mesothelioma, a deadly cancer that attacks a thin layer of tissue that covers many internal organs. J&J says its talc does not contain asbestos.
Reuters article – Johnson & Johnson adds $1.1 billion to proposed talc settlement (Open access)
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