J&J is close to revealing support for the talc settlement, sources say

Johnson & Johnson is preparing to reveal broad support in the coming days for a $6.48 billion bid to settle tens of thousands of lawsuits alleging that its baby powder and other talc products caused cancer, two people said. people familiar with the problem.

The health care giant plans to reveal as soon as Friday that 75 percent or more of the plaintiffs who claim J&J talc made them sick have voted in favor of a bankruptcy settlement that would halt current and future cases, the people said.

J&J is preparing for a subsidiary to seek bankruptcy protection as soon as next week to execute the deal, the people said. Support from 75 percent of the plaintiffs is the legally required threshold for a judge to approve the type of bankruptcy settlement J&J is proposing. The deadline for casting votes was July 26.

Related: J&J gets plaintiff backing in $6.5 billion baby powder settlement

The company claims its talc products are safe and do not cause cancer. J&J’s schedule for both disclosing plaintiffs’ settlement support and filing for bankruptcy, which were not previously reported, remains in flux and could change, one of the people said.

As of early this week, J&J was still in the process of reviewing the plaintiffs’ votes, although it expected to receive the support needed to bring the proposed settlement before a bankruptcy judge for approval, this person said.

“We cannot comment until the vote is certified,” a J&J spokesman told Reuters.

Related: J&J loses latest legal bid to revive bankruptcy strategy with Talc

J&J faces defamation lawsuits from more than 62,000 plaintiffs, according to a company filing. But the number rises to 100,000 when plaintiffs who did not sue are counted, said Erik Haas, J&J’s global vice president of litigation.

After being rejected twice by federal courts, J&J is again trying to end the talc litigation in a so-called “Texas two-step” bankruptcy.

The two-step maneuver involves offloading its talc debts to a newly created subsidiary, which then files for Chapter 11. The goal is to use the procedure to force all plaintiffs into a single settlement without requiring J&J to file bankruptcy itself.

Related: Battle over J&J’s bankruptcy plan to end talc lawsuits

Some lawyers representing tens of thousands of cancer victims oppose J&J’s plan to try the legal maneuver a third time and are locked in a bitter battle with the company.

Courts have dismissed J&J’s previous two-stage bankruptcies in New Jersey, where the company is headquartered, on the grounds that its subsidiary did not have the “financial hardship” necessary for Chapter 11 protection. J&J plans this time for its subsidiary to file for bankruptcy in Texas , where some legal experts said they might get a different take on the financial hardship standard.

J&J’s current plan differs from the previous two in several key ways. The latest settlement offer addresses allegations that talc caused ovarian and other gynecological cancers, which make up the bulk of the claims J&J faces.

It rules out other claims, including those by plaintiffs who claim asbestos talc caused their mesothelioma, a deadly cancer that attacks a thin layer of tissue that covers many internal organs. J&J says its talc is asbestos-free.

The company has settled nearly all mesothelioma cases out of bankruptcy court, as well as claims from states alleging J&J misled consumers about the safety of its talcum powder. Those deals removed opposition that helped derail previous two-step bankruptcies.

J&J also this time sought consent votes before filing for bankruptcy. Previous Chapter 11 cases have involved post-filing voting claimants.

J&J wants to use Chapter 11 proceedings because bankruptcy judges can enforce blanket settlements that permanently halt all related lawsuits and bar new ones, all for a capped payment.

In the court system, rather than in bankruptcy court, any settlement J&J reached with some customers would still leave defendants or future plaintiffs with the right to sue, potentially exposing the company to the kind of billion-dollar verdicts which led her to follow. the two-step strategy first.

J&J won most of the cases that went to trial. But its losses include a Missouri verdict for ovarian cancer victims that ultimately cost J&J $2.1 billion.

(Reporting by Spector; Editing by Leigh Jones and Daniel Wallis)