Key takeaways
- Johnson & Johnson's shares fell after a judge ruled against his proposed resolution of the talcum powder lawsuits.
- The court rejected the proposal for the second time to allow a subsidiary that bore the responsibilities to file for bankruptcy.
- J&J said he would appeal the decision and defend himself against lawsuits.
Johnson & amp; Johnson (JNJ) was the worst-performing Dow Jones stock after the pharmaceutical and medical device maker failed a second time to win court approval to address liability claims related to talcum powder through the bankruptcy.
U.S. Bankruptcy Court Judge Michael Kaplan in New Jersey rejected the company's proposal, ruling that the lawsuits did not put the company in immediate “financial distress”.
J&J has been sued by thousands of plaintiffs who claim its talcum powder caused them to develop cancer because it contained asbestos. The company planned to manage them by letting a new subsidiary, LTL Management, take on the responsibilities and declare bankruptcy. LTL would then pay $8.9 billion in settlements, which would end any future liability.
That 2021 decision was challenged by some plaintiffs and thrown out by a Philadelphia court earlier this year. LTL tried again, saying more plaintiffs were in favor. However, Judge Kaplan said he saw no reason why LTL needed Chapter 11 relief.
J&J indicated that LTL would appeal the decision and the company would vigorously defend itself against the lawsuits, which it called “specious and baseless”.
Johnson & Johnson fell nearly 4% on Monday after the news broke and has been in negative territory for most of 2023.
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Source: investopedia.com
