Johnson & Johnson gears up for showdown over reorg votes with ex-talc supplier

A bottle of Johnson's Baby Powder is seen in a photo illustration taken in New York
A bottle of Johnson and Johnson Baby Powder is seen in a photo illustration taken in New York, February 24, 2016. REUTERS/Mike Segar/Illustration
  • J&J says votes were improperly switched after deadline
  • Personal injury claimant group defends vote changes
  • Votes are key for Imerys Talc reorganization

(Reuters) - Johnson & Johnson will urge a judge on Monday to disqualify certain votes in favor of a reorganization plan proposed by its former talc supplier, saying the votes were improperly changed in an attempt to secure necessary creditor support for the deal.

The dispute is the latest between the pharmaceutical giant and Imerys Talc America, which filed for bankruptcy in February 2019 to deal with about 15,000 lawsuits alleging its products caused ovarian cancer and asbestos-related mesothelioma. While Imerys, represented by Latham & Watkins, is trying to push forward a plan that would allow it to wrap up the bankruptcy and set up a trust to compensate personal injury claimants, J&J has objected to the deal, saying Imerys is trying to make it easier for cancer victims to sue J&J instead.

J&J, represented by Weil Gotshal & Manges in the Imerys Chapter 11 case, has long denied wrongdoing in response to litigation over its talc products. Reuters reported this summer that the company has explored spinning off its talc liabilities into a new entity and placing that entity into bankruptcy.

J&J has asked U.S. Bankruptcy Judge Laurie Selber Silverstein to toss more than 15,000 plan votes cast by the law firm Bevan & Associates on behalf of personal injury claimants. More than 80,000 votes were cast overall. The motion was filed under seal but J&J submitted a publicly available document on Thursday that said the Bevan votes were changed after the plan voting deadline.

J&J contends that the votes were changed in favor of the plan after the official Imerys tort claimants’ committee, represented by Robinson & Cole, contacted Bevan upon realizing there were not enough favorable votes to meet the threshold required under bankruptcy law.

The plan proponents want to "bury their heads in the sand and exclaim that everyone should just move on because there is nothing to see here, a vote is a vote," J&J said in Thursday's filing.

J&J also argued that the Bevan claimants have no reason to support the plan since most of them do not have ovarian cancer or mesothelioma-based claims and are therefore not eligible for certain trust review processes. But the tort claimants' committee said that any talc claims, even if they are unlikely to be paid, are allowed to vote since their rights will be impaired.

Bevan said in court papers that “no promises or inducements” were offered to the firm’s claimants in exchange for their votes.

J&J also moved to disqualify nearly 500 votes submitted by another firm, Williams Hart Boundas Easterby, saying that firm was improperly offered a seat on the trust advisory committee in exchange for changing its votes.

The tort claimants' committee has defended the vote changes, saying in court papers that its members contacted Bevan and Williams Hart to have “good-faith communications” about concerns claimants had with the plan. The committee also said the Bevan claimants initially voted against the plan due to a misreading of certain provisions.

The committee called J&J’s efforts to toss the votes “conspiracy theories and innuendo.”

Representatives for J&J did not immediately respond to requests for comment. A representative for Imerys declined to comment.

Imerys, once the U.S.-based arm of French group Imerys SA, was sold to Magris Resources Canada for $223 million in 2020. Those proceeds will go to a trust that, under the company’s proposed plan, will pay personal injury claims.

The case is In re Imerys Talc America Inc., U.S. Bankruptcy Court, District of Delaware, No. 19-10289.

For Imerys: Jeffrey Bjork, Kimberly Posin, Helena Tseregounis and Richard Levy of Latham & Watkins and Mark Collins, Michael Merchant, Amanda Steele and Brett Haywood of Richards Layton & Finger

For Johnson & Johnson: Diane Sullivan, Gary Holtzer, Ronit Berkovich and Theodore Tsekerides of Weil Gotshal & Manges, and Patrick Jackson of Faegre Drinker Biddle & Reath

For the tort committee: Natalie Ramsey, Mark Fink and Michael Enright of Robinson & Cole, Rachel Strickland, Jeffrey Korn, Dan Forman and Stuart Lombardi of Willkie Farr & Gallagher and Kami Quinn and Heather Frazier of Gilbert

Read more:

U.S. judge declines to stop J&J from splitting talc liabilities from main business

EXCLUSIVE – J&J exploring putting talc liabilities into bankruptcy

Imerys Talc reorg plan vote changes prompt confusion, contention in bankruptcy

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Maria Chutchian reports on corporate bankruptcies and restructurings. She can be reached at