US court rejects bankruptcy petition by J&J's talc unit

US court rejects bankruptcy petition by J&J’s talc unit

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J&J had argued that bankruptcy provided a way to resolve tens of thousands of legal claims more efficiently and fairly than taking the cases to separate hearings. The company pledged “backstop” funding to ensure that LTL Talc could pay claimants.

The appeals court said it rejected the LTL Chapter 11 petition because the entity was formed solely to use the bankruptcy system, not because it was troubled financially.

“Enforced here, while LTL faces substantial talc liability in the future, its funding backstop clearly mitigates any financial distress,” the 56-page opinion by the three-judge panel said.

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