J&J Talc Bankruptcy ‘Bad Faith’ Claims Go Before Third Circuit

Johnson & Johnson’s controversial use of Chapter 11 to handle widespread asbestos-related litigation is under review by the Third Circuit, which will weigh whether a financially healthy company can use bankruptcy to resolve mass tort cases.

The dispute stems from J&J’s decision last year to shift billions of dollars in mass tort liabilities to a newly created entity, LTL Management LLC. The health care giant then immediately placed LTL into bankruptcy to consolidate all its asbestos litigation in one place.

The US Court of Appeals for the Third Circuit on Monday is hearing oral arguments on whether a solvent company ...