J&J unit, talc claimants look to February hearing over bankruptcy validity

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Bottles of Johnson & Johnson baby powder line a drugstore shelf in New York October 15, 2015. REUTERS/Lucas Jackson

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  • Talc claimants' group wants Chapter 11 case dismissed
  • J&J subsidiary to seek mediation during bankruptcy

(Reuters) - The Johnson & Johnson subsidiary that holds the company's talc liabilities is tentatively set to defend its decision to file for bankruptcy in February.

The newly assigned judge overseeing the Chapter 11 case, U.S. Bankruptcy Judge Michael Kaplan said during a hearing in his Trenton, New Jersey courtroom on Monday that he would block off four days beginning on Feb. 15 for a hearing on a motion to dismiss the bankruptcy. The motion will be filed soon by the talc claimants’ committee, which represents people who have sued J&J alleging that its talc products cause mesothelioma and ovarian cancer.

Monday’s hearing was the first in the case since it was transferred from a North Carolina court, where the bankruptcy kicked off. J&J subsidiary LTL Management LLC filed for Chapter 11 protection in October to consolidate and settle around 38,000 talc-related legal claims. J&J maintains that its talc products are safe and that bankruptcy is the best way to handle the claims.

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Kaplan said on Monday that he understood that “a number of you here would prefer not to be in Trenton,” referring to J&J’s intention to pursue the bankruptcy in the Western District of North Carolina, a court that has garnered a reputation for being friendly to businesses looking to rid themselves of asbestos liabilities. But U.S. Bankruptcy Judge Craig Whitley decided earlier this month that the case should be in New Jersey, where J&J is headquartered and where a large chunk of the talc litigation is concentrated.

“We’ll play the hand that’s dealt us,” Kaplan said of the case being moved to his court.

Shortly after Whitley transferred the case to New Jersey, J&J announced plans to spin off its consumer health division from its pharmaceutical business. The company has said the move has nothing to do with its talc liabilities.

However, the talc claimants committee challenged that position in court papers, saying that a spinoff would create barriers between the claimants and J&J assets that could be used to compensate them.

The committee has disputed the legitimacy of the bankruptcy overall, saying J&J is trying to use it to gain an upper hand in existing talc litigation by preventing plaintiffs from having their day in court. One major case that has been pending for five years is on the verge of trial.

LTL plans to request mediation during the bankruptcy, which Kaplan said he generally supports.

The case is In re LTL Management LLC, U.S. Bankruptcy Court, District of New Jersey, No. 21-30589.

For LTL Management: Gregory Gordon, Dan Prieto, Amanda Rush and Brad Erens of Jones Day

For the committee: David Molton of Brown Rudnick; Melanie Cyganowski of Otterbourg; Daniel Stolz of Genova Burns; Brian Glasser of Bailey Glasser; Lenard Parkins of Parkins Lee & Rubio; and Jonathan Massey of Massey & Gail

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Maria Chutchian reports on corporate bankruptcies and restructurings. She can be reached at maria.chutchian@thomsonreuters.com.