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(Reuters) – The decide overseeing the bankruptcy of Johnson & Johnson’s subsidiary that holds its talc liabilities is contemplating a switch of the continuing out of North Carolina.
U.S. Bankruptcy Judge Craig Whitley in Charlotte issued an order on Tuesday instructing the bankrupt entity, LTL Administration LLC, to elucidate why he should not ship the case to a different court docket. His order notes that not solely is most of the talc-related litigation in opposition to the debtor situated in New Jersey, however that can be the place LTL and J&J’s principal belongings, staff and headquarters are situated.
Whitley stated in his order that he has authority to switch a case if he determines it is in the curiosity of justice or extra handy for the events concerned.
“It is unusual for the court to invoke this rule on its own motion; however, this is a highly unusual case,” Whitley wrote in his order.
The decide’s order comes about two weeks after J&J – which isn’t itself in bankruptcy – shifted its talc liabilities into LTL, a brand new entity after which positioned it into Chapter 11 in an effort to resolve 1000’s of claims alleging its merchandise, together with child powder, trigger ovarian most cancers and mesothelioma.
LTL is represented in the bankruptcy by Jones Day.
A authorities bankruptcy watchdog has additionally referred to as on the decide to switch the case to New Jersey. U.S. Bankruptcy Administrator Shelley Abel stated J&J shouldn’t be permitted to “manufacture” a presence in North Carolina, the place different giant, asbestos-related bankruptcies have occurred.
The decide and Abel each famous that LTL was solely established in North Carolina two days earlier than the bankruptcy was filed.
Whitley additionally stated his court docket is already strapped, saying there are 5 different mass tort bankruptcies pending in his district now.
A consultant for LTL and J&J didn’t instantly reply to a request for remark.
A listening to on the matter is about for Nov. 10.
Plaintiffs corporations have denounced J&J’s use of the bankruptcy system to defend itself in opposition to talc litigation, noting that the mother or father firm itself is financially wholesome.
The corporate stopped promoting child powder in the USA and Canada in May 2020, in half as a result of what it referred to as “misinformation” and “unfounded allegations” in regards to the talc-based product. J&J maintains its shopper talc merchandise are protected and confirmed by way of 1000’s of exams to be asbestos-free.
LTL has requested Whitley to situation an order halting ongoing talc litigation in opposition to J&J whereas the bankruptcy proceeds. The decide declined to take action final week however is giving the debtor one other shot at a listening to starting on Nov. 4.
In June, the U.S. Supreme Courtroom declined to listen to J&J’s attraction of a Missouri court docket ruling that resulted in $2 billion of damages awarded to girls alleging the corporate’s talc brought on their ovarian most cancers. J&J has prevailed in different latest talc circumstances, nonetheless.
The case is In re LTL Administration LLC, U.S. Bankruptcy Courtroom, Western District of North Carolina, No. 21-30589.
For LTL: Gregory Gordon, Dan Prieto, Amanda Rush and Brad Erens of Jones Day; and Rick Rayburn, Jack Miller and Matthew Tomsic of Rayburn Cooper & Durham
For J&J: Jessica Lauria of White & Case; and Hillary Crabtree of Moore & Van Allen
J&J places talc liabilities into bankruptcy
Maria Chutchian reviews on company bankruptcies and restructurings. She might be reached at [email protected]