J & J Can ’ t Be Allowed To Dodge Civil Justice With Bankruptcy
By Glenn Chappell , Leora Friedman and Allison Parr
A New Jersey bankruptcy judge recently heard arguments on whether Johnson & Johnson can use the bankruptcy system to derail tens of thousands of lawsuits and shield its assets from potentially billions upon billions of dollars in liability arising from claims that its talcum powder causes cancer .
The stakes could not be higher . J & J ’ s corporate maneuvering threatens access to justice for thousands of cancer victims and their families , and if allowed to stand , it could lay the groundwork for other thriving companies to use the bankruptcy process to avoid their obligations under the civil justice system .
For entities that turn to the bankruptcy courts for a lifeline , the U . S . Bankruptcy Code provides extraordinary , powerful forms of relief not found in any other court . These tools serve important purposes when a financially struggling debtor seeks reorganization under Chapter 11 : They give the debtor the breathing room and finality needed to embark on a fresh start , and they preserve the debtor ’ s assets so that creditors can recover as much as possible under the circumstances .
But when the debtor is not in legitimate financial distress , those tools become weapons for injustice . Johnson & Johnson ’ s strategy in In re : LTL Management LLC is just such an example .
In a highly publicized ploy , J & J , one of the nation ’ s largest and most prosperous corporations , exploited a quirk in Texas corporation law to divorce its assets from its existing and potential liabilities to plaintiffs in thousands of talc cases across the country , and it is now seeking the Bankruptcy Code ’ s special protections to delay , hinder or limit the plaintiffs ’ recovery in those cases .
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