In October 2021, Johnson & Johnson began a process to resolve claims raised in the cosmetic talc lawsuits in North America. As part of this, Johnson & Johnson established a new subsidiary called LLT Management LLC (formerly known as LTL Management LLC) (“LLT”) that would be responsible for holding and managing North American legal claims related to the Company’s cosmetic talc. LLT voluntarily filed for Chapter 11 bankruptcy, activating a process designed to resolve these claims in a way that would be reasonable for all parties, including current and future claimants.
In a January 2023 ruling, the U.S. Court of Appeals for the Third Circuit dismissed this filing on legal grounds. In April 2023, LLT re-filed for voluntary bankruptcy protection in the U.S. Bankruptcy Court for the District of New Jersey. The re-filed case addressed concerns cited in the Third Circuit’s dismissal and included a reorganization plan that proposed to provide up to $8.9 billion in payments to claimants and was supported by at least 60,000 current claimants.
In July 2023, the New Jersey Bankruptcy Court granted plaintiffs’ motion to dismiss LLT’s re-filed bankruptcy case. In its dismissal, the Court recognized that the Company and LLT had made “remarkable progress” towards “a fair, efficient and expeditious settlement” for all claimants and “strongly encouraged” the pursuit of a comprehensive resolution through another bankruptcy.
The Company and LLT followed that directive and, on May 1, 2024, announced a new proposed Plan of Reorganization (the “Plan”) for the comprehensive and final resolution of all current and future talc claims related to ovarian cancer arising from cosmetic talc litigation against Johnson & Johnson and its affiliates in the U.S. The Plan was developed with the assistance and support of counsel representing the overwhelming majority of current ovarian claimants, and differed significantly from the prior reorganization plans as it allowed claimants to participate in a solicitation period to vote on the Plan and have their voice heard – something that was previously denied to them by lawyers representing a small minority of claimants.
Red River Talc LLC Chapter 11 Filing
As a result of the solicitation process, which was conducted by Epiq Bankruptcy Solutions LLC, Red River Talc LLC (“Red River”), a subsidiary of Johnson & Johnson that subsequently became responsible for holding and managing North American legal claims related to the Company’s cosmetic talc, secured support from approximately 83% of the claimants, surpassing the 75% vote threshold to confirm the Plan. The Plan is also supported by the Future Claims Representative, who is an attorney that represents future claimants.
Given the voting results and support from other parties, on September 20, 2024, Red River commenced a voluntary prepackaged Chapter 11 case in the U.S. Bankruptcy Court for the Southern District of Texas.
Red River filed the case to confirm the Plan, which, after extensive negotiations with claimants’ counsel, had been modified to increase contributions to the settlement by $1.75 billion to approximately $8 billion. As part of that, Red River agreed to commit an additional $1.1 billion to the bankruptcy trust for distribution to claimants. The Company backed Red River’s commitments and agreed to contribute an additional $650 million to resolve the claims for common benefit fund amounts advanced by plaintiffs’ counsel in leadership roles in the multi-district litigation, where the vast majority of filed ovarian claims are pending. In aggregate, the contemplated settlement represents a present value of approximately $8 billion to be paid over 25 years, totaling approximately $10 billion nominal.
The Plan enables a full and final resolution of the Company’s ovarian talc litigation, resolving 99.75% of all pending talc lawsuits against Johnson & Johnson and its U.S. affiliates. The 0.25% remaining pending talc lawsuits relate to mesothelioma and are being addressed outside of the Plan. The Company has already resolved 95% of mesothelioma lawsuits filed to date.
The Company previously reached settlement agreements to resolve the State consumer protection claims and all talc-related claims against it in the bankruptcy cases filed by suppliers of the Company’s talc (Imerys Talc America, Inc., Cyprus Mines Corporation, and their related parties).
Red River’s bankruptcy filing is not an admission of wrongdoing. Decades of independent scientific testing have confirmed that Johnson & Johnson’s products are safe, do not contain asbestos, and do not cause cancer. We do not believe that any of the talc-related claims against the Company have merit, nor do we believe our products responsible for any illness. However, we believe that finding a way to resolve the Company’s talc litigation as quickly and efficiently as possible is in the best interests of claimants and all stakeholders.
THE CHAPTER 11 PROCESS
Chapter 11 is a well-established legal process in the United States that allows a company to complete a financial or operational restructuring under the supervision of a Bankruptcy Court. As part of the process, companies must file a Plan of Reorganization, which outlines how money that is determined to be owed to various creditors or equity holders will be paid. The Plan of Reorganization must be approved by a majority vote of eligible claimants and the Bankruptcy Court. This process results in a Plan of Reorganization that is fair and equitable for all stakeholders.
WHY CHAPTER 11 IS THE BEST PATH TO RESOLVE THE TALC LITIGATION
The Chapter 11 process provides a single venue for all parties to participate in the resolution process, resulting in a comprehensive, fair, and efficient settlement agreement that cannot be achieved through individual jury trials or negotiations.
While the Company is prepared to try every case, addressing each and every one of the talc cases against Johnson & Johnson on an individual basis could take decades. Even then, there is no known, definitive outcome or guarantee that all cases would reach resolution. The United States tort system is not equipped to resolve thousands of cases quickly or efficiently.
The Chapter 11 process brings everyone to the table to negotiate an agreement, provides for the quickest and most efficient resolution for people who have legal claims related to talc and provides certainty for all parties.
Importantly, Chapter 11 allows people who may make a legal claim related to Johnson & Johnson’s talc in the future to participate in the resolution through an independent representative, called a “Future Claims Representative,” appointed by the Bankruptcy Court. That Court-appointed agent assesses the number of future claims and the total amount of fair compensation and determines how compensation should be distributed.
Red River’s Plan was developed with the assistance and support of counsel representing the overwhelming majority of current ovarian claimants. Court filings and information about Red River’s Chapter 11 case are available on a separate website administered by its claims agent, Epiq, at https://dm.epiq11.com/case/redrivertalc/info