Johnson & Johnson’s legal saga over its talc products took another dramatic turn on Friday as a subsidiary of the pharmaceutical giant filed for bankruptcy for the third time, aiming to push forward a proposed $8 billion settlement. The settlement would resolve tens of thousands of lawsuits that claim the company’s talcum powder, including its well-known baby powder, caused cancer due to asbestos contamination.

The bankruptcy filing was submitted by J&J’s Red River Talc subsidiary in the U.S. Bankruptcy Court for the Southern District of Texas, a court that has gained prominence for handling complex corporate bankruptcies. This legal move marks yet another chapter in J&J’s ongoing efforts to shield itself from the mounting number of lawsuits, which have now exceeded 62,000 claims. These lawsuits argue that long-term use of J&J’s talc-based products has led to serious health conditions, including ovarian cancer and mesothelioma—a type of cancer linked directly to asbestos exposure.

J&J’s Repeated Denials and Legal Tactics

Despite the lawsuits, Johnson & Johnson has consistently denied the allegations, asserting that its talc products are safe for consumer use. The company maintains that its products do not contain asbestos and that independent scientific studies back up the safety of its talc offerings. Nevertheless, the claims and legal battles have been relentless, forcing the company to explore alternative legal strategies to manage the escalating costs and reputational damage.

One of those strategies is the controversial “Texas two-step” bankruptcy maneuver, a legal tactic J&J is employing for the third time. Under this approach, J&J transfers the liability for talc-related claims to a newly created subsidiary—in this case, Red River Talc—which then files for Chapter 11 bankruptcy. The goal is to resolve all the lawsuits in one global settlement while insulating J&J’s core business from the financial fallout. Importantly, this maneuver allows J&J itself to avoid filing for bankruptcy, keeping the bulk of its operations intact and protected from the legal firestorm.

A Settlement Strategy Gaining Traction

J&J’s latest bankruptcy filing follows an important development: the company has secured the backing of a substantial majority of claimants for its proposed settlement plan. According to J&J, 83% of the current claimants have agreed to support the deal, which exceeds the 75% threshold required under bankruptcy law for a judge to impose the settlement on all parties. This level of support is crucial as it could enable J&J to force a resolution that applies to all claimants, effectively ending the litigation.

In previous attempts, J&J had struggled to gain enough momentum for its settlement plan. The company’s earlier efforts were rejected by federal courts, leaving the lawsuits unresolved. But by focusing its latest settlement on ovarian and other gynecological cancer claims, J&J is attempting to narrow the scope of the cases it faces. This strategy builds upon previous settlements the company has reached with state attorneys general and individuals who developed mesothelioma, another form of cancer tied to asbestos exposure.

Bankruptcy Judges’ Role in Global Settlements

If successful, the bankruptcy process would allow a judge to enforce a global settlement that permanently halts all related lawsuits and blocks future claims. Such a resolution would prevent holdout plaintiffs from pursuing separate litigation, which could leave J&J vulnerable to costly verdicts. Outside of bankruptcy, any settlement with some claimants would still leave the door open for others to sue, making the company’s financial exposure unpredictable and potentially overwhelming.

By contrast, a bankruptcy judge has the power to implement a binding settlement that encompasses all claimants, effectively closing the chapter on the talc litigation. This is why J&J continues to pursue the bankruptcy route, despite the legal and public relations challenges it has encountered.

Legal Challenges and Future Hurdles

However, J&J’s third bankruptcy attempt is far from a done deal. The company faces staunch opposition from attorneys representing some plaintiffs, who argue that J&J is abusing the bankruptcy system to escape full accountability. These opponents point to recent legal developments, including a U.S. Supreme Court ruling in June 2024 that addressed bankruptcy protections for companies like Purdue Pharma, which was embroiled in litigation over its role in the opioid crisis.

In addition, federal court orders have dismissed J&J’s previous bankruptcy attempts, and proposed legislation in Congress aims to prevent profitable companies from using bankruptcy to sidestep liability. These legal and political hurdles suggest that J&J’s latest move will not go unchallenged.

While J&J has made significant progress by securing support from a majority of plaintiffs, it remains to be seen whether this third attempt will finally put an end to the litigation surrounding its talc products—a controversy that has tarnished the company’s reputation and raised serious questions about corporate accountability and consumer safety in the healthcare industry.