In a federal bankruptcy court in Trenton, New Jersey, Judge Michael Kaplan ruled in favor of Johnson & Johnson's (NYSE:JNJ) controversial bankruptcy filing meant to settle 38,000 claims alleging its talc-based products caused cancer.
- According to the Wall Street Journal report, the ruling will allow a J&J subsidiary, LTL Management, to proceed with its chapter 11 filing and freezes all outstanding talc litigation while J&J pursues a settlement.
- Kaplan wrote that J&J's bankruptcy plan was not done in bad faith but rather to resolve mass litigation.
- Also see: Johnson & Johnson To Defend Baby-Powder Lawsuits In Court: Report.
- Plaintiffs' attorneys had argued that the bankruptcy plan was part of a "Texas Two-Step" legal maneuver to minimize potential payouts related to the allegations.
- Last week, a lawyer for J&J's bankrupt subsidiary, LTL Management, said the parent company was close to a talc settlement last year that would have cost between $4 billion and $5 billion, which was more than double the figure J&J offered to resolve the liability through the bankruptcy procedure.
- Price Action: JNJ shares are down 1.25% at $163.93 during the market session on the last check Monday.
