“In sum, this Court smells smoke, but does not see the fire,” Judge Kaplan wrote in his opinion, referencing LTL’s financial status. “Therefore, the emphasis on certainty and immediacy of financial distress closes the door of chapter 11 to LTL at this juncture.”
The company’s shares dropped close to 2 percent in after-hours trading.
J&J said its subsidiary planned to appeal Judge Kaplan’s ruling. In a statement on Friday, Erik Haas, J&J’s worldwide vice president of litigation, said, “We respectfully disagree with the bankruptcy court’s conclusion that the ‘substantial liability’ that LTL faces from the massive volume of talc claims asserted against it does not establish ‘immediate’ financial distress under the standard imposed by the Third Circuit, which itself is found nowhere in the bankruptcy code and is contrary to the persuasive authority from other Circuit Courts and directives of the Supreme Court of the United States.”
He added, “As the bankruptcy court urged in its decision, we will continue to work with counsel representing about 60,0000 claimants to pursue a resolution of the talc claims.”
Johnson & Johnson, which makes Band-Aids and Listerine mouthwash as well as vaccines and other pharmaceuticals, stopped selling talc-based baby powder this year, after switching to cornstarch as the primary ingredient of the product.
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