Johnson & Johnson (JNJ.N) has agreed to pay $8.9 billion to settle tens of thousands of lawsuits alleging that talc in its iconic Baby Powder and other products caused cancer, the company said. The amount dwarfs J&J’s original offer of $2 billion, Trend reports citing Reuters.
The agreement follows a January appeals court ruling invalidating J&J’s controversial “Texas two-step” bankruptcy maneuver, in which it sought to offload the talc liability onto a subsidiary that immediately filed for Chapter 11.
The J&J subsidiary, LTL Management, filed for bankruptcy protection late Tuesday for a second time with the intent to present a reorganization plan containing the proposed settlement to a judge as soon as May 14, the subsidiary said in a court filing. J&J said in a statement that about 60,000 talc claimants had agreed to the proposal.
The J&J subsidiary filed for bankruptcy in New Jersey, the same jurisdiction where it faced the appeals court defeat. J&J crafted new financing arrangements with its subsidiary to avoid running afoul of the appeals ruling, the subsidiary said in a court filing. The ruling determined LTL Management had no legitimate claim to bankruptcy because it was not in financial distress.