With the Firm serving as its co-counsel, LTL Management LLC, a subsidiary of Johnson & Johnson, recently prevailed over motions to dismiss LTL’s Chapter 11 bankruptcy case and, at the same time, successfully extended a preliminary injunction staying lawsuits against its corporate affiliates and retailers. LTL filed bankruptcy to resolve talc-related liability.
Multiple groups of claimants filed motions to dismiss the bankruptcy proceeding, alleging it was not filed in good faith. On February 25, 2022, after a five-day evidentiary hearing, the Bankruptcy Court denied the motions. The Court agreed with LTL that the Debtor’s formation in compliance with long-standing Texas corporate law, as well as its subsequent bankruptcy, were a good-faith effort on the part of management to efficiently and equitably resolve all of the claims. At trial, LTL demonstrated that litigating talc cases one or a few at a time would take a minimum of decades and likely lead to erratic outcomes such that some claimants might receive large verdicts while others might receive nothing. LTL also showed that even though its predecessor Johnson & Johnson subsidiary was solvent at the time of the reorganization, its talc liability and the related legal expenses constituted financial distress and were a significant threat to solvency.
The Firm also successfully represented LTL in securing continued injunctive relief that protects Johnson & Johnson, other J&J subsidiaries, retailers, and indemnified third-parties from litigation while the bankruptcy case is ongoing. As a result, the case will proceed before Chief Judge Kaplan in the United States Bankruptcy Court for the District of New Jersey with the injunction in place.
Copies of the Bankruptcy Court’s decisions denying the motion to dismiss and continuing the injunction can be found here.