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ARTICLE · 07 FEBRUARY 2023

Put Down Your Fiddle: Third Circuit Halts Johnson & Johnson's Texas Two-step

Thompson Coburn LLP
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On January 30, 2023, the Third Circuit Court of Appeals dismissed the bankruptcy filing by Johnson & Johnson's subsidiary, LTL Management, LLC ("LTL").

United StatesInsolvency/Bankruptcy/Re-Structuring
Joseph Orbach
Joseph Orbach
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On January 30, 2023, the Third Circuit Court of Appeals dismissed the bankruptcy filing by Johnson & Johnson's subsidiary, LTL Management, LLC ("LTL"). The Circuit Court reversed the New Jersey Bankruptcy Court and held that LTL did not file the bankruptcy case in good faith and therefore was ineligible to petition the bankruptcy court for relief.

Background1

Johnson & Johnson Consumer Inc. ("Old Consumer"), a wholly-owned subsidiary of Johnson & Johnson ("J&J"), sold iconic health care products, including Band-Aid, Tylenol, Aveeno, and Listerine. It also produced Johnson's Baby Powder. Concerns that the talc base in the Baby Powder contained traces of asbestos led to a torrent of lawsuits against Old Consumer and J&J, alleging Johnson's Baby Powder caused ovarian cancer and mesothelioma. Some of those suits resulted in verdicts against the defendants, some failed (outright or on appeal), and others settled.

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