J&J Unit Seeks Vote Too Soon on Reorganization Plan, DOJ Says

The Justice Department is objecting to LTL Management LLC’s attempts to start soliciting for creditors’ votes on its bankruptcy plan, arguing that the bankrupt Johnson & Johnson subsidiary doesn’t have court approval to proceed.

All parties “have the right to be heard on every step of the solicitation process,” according to a letter the US Trustee, the DOJ’s bankruptcy watchdog, sent to a bankruptcy judge July 21.

The US Trustee asked Judge Michael Kaplan of the US Bankruptcy Court for the District of New Jersey to order LTL to withdraw its solicitation directives. LTL is aiming to drum up support for a plan that would, if approved, resolve widespread litigation alleging J&J’s baby powder caused cancer.

An Aug. 22 hearing was scheduled to assess whether LTL can proceed with soliciting creditors’ votes, which are needed for the reorganization plan to take effect.

But instead of waiting, LTL sent out a directive email on July 18 and asked creditors to vote by Aug. 15, according to the US Trustee. LTL said in its email to creditors that it’s following the solicitation procedures laid out in its Chapter 11 plan, according to the letter.

“There should be no rush with respect to a process that must protect the due process rights of creditors,” the US Trustee said.

J&J created LTL to house all claims from consumers who claim they developed cancer from using its talc products. J&J has maintained that its products are safe.

LTL filed a second bankruptcy in April after the bankruptcy court dismissed its initial Chapter 11 case in January.

In the second bankruptcy, LTL is proposing to pay $8.9 billion to resolve talc claimants’ claims.

LTL’s representatives didn’t immediately respond to a request for comment.

The case is LTL Management LLC, Bankr. D.N.J., No. 3:23-bk-12825, 7/21/23.