Johnson & Johnson’s so-called “Texas Two-Step” plan to create an entity that would be created solely to handle tens of thousands of talc powder claims and declare bankruptcy was approved by a judge in a New Jersey bankruptcy court. 

Nasdaq reported that Judge Michael Kaplan of the U.S. Bankruptcy Court in Trenton, NJ, ruled that LTL Management can file for chapter 11 bankruptcy so that parent company, J&J can “get out of the mud.” 

Critics of the approval, including the nearly 40,000 plaintiffs who have filed claims against J&J, alleging that they developed ovarian cancer because of the company’s asbestos-contaminated talc, believe the move by J&J is taking advantage of the system in order to shield itself from paying top-dollar settlements. 

But Judge Kaplan said that there was no proof that the move by J&J to create the subunit to take on its talc liabilities was committed in bad faith. 

J&J maintains that if it were forced to litigate all the cases against it, it would cost the company approximately $190 billion. Previously, J&J had proposed a $2 billion settlement to resolve talc litigation. 

But after the Supreme Court refused to hear a 2018 plaintiff verdict in Missouri that awarded 22 women $4.7 billion for their ovarian cancer claims (the award was later reduced to $2.1 billion and one plaintiff was removed from the class), a $2 billion proposal to resolve tens of thousands of claims seems paltry. 

J&J removed its talc products from North American stores in 2020 and is facing pressure from shareholders to remove them globally. Asbestos and talc are both minerals that are often located very close to each other in mining operations. In previous talc powder cancer trials, an expert witness claimed that it’s virtually impossible for talc to not be contaminated with asbestos, which is a carcinogenic compound.