Texas court rules J&J didn’t skirt bankruptcy rules in talc case: report
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A federal court in Texas has reportedly found that Johnson & Johnson (NYSE:JNJ) didn’t manipulate the bankruptcy system when it filed for bankruptcy of its talc powder unit in Texas rather than New Jersey, where it is headquartered.
J&J (JNJ) has offered more than $8B to settle litigation over the safety of its talc powder products. It has said that around 83% of the claimants who voted on the proposal are in favor of it, according to Bloomberg.
J&J (JNJ) set up its Red River Talc unit to absorb the costs of a settlement. The unit, which is incorporated in Texas, would then file for bankruptcy, a legal maneuver known as the Texas Two Step.
The U.S. Justice Department, meanwhile, has argued that J&J’s Texas strategy manipulates the bankruptcy system and that the case should be moved back to New Jersey, where J&J’s (JNJ) plan has been twice rejected by the courts, Bloomberg added.