In a high-stakes courtroom clash, a Johnson & Johnson spinoff launched its bid Tuesday for a landmark $10 billion Chapter 11 settlement to resolve talc-related claims. But as proceedings kicked off before a Texas bankruptcy judge, fierce opposition cast doubt on the deal’s legitimacy, setting the stage for an explosive two-week trial.
Opponents wasted no time in attacking the bankruptcy case and vote process, while Red River Talc, the J&J spinoff at the center of the case, insisted that nine out of ten claimants back the deal, calling it their best shot at recovery.
“This $10 billion resolution is the largest asbestos settlement in U.S. history,” declared Allison Brown of Skadden Arps Slate Meagher & Flom LLP, representing Red River.
The Texas Two-Step: J&J’s Controversial Legal Maneuver
The battle stems from J&J’s strategic use of the “Texas two-step” bankruptcy tactic, which allowed the pharmaceutical giant to spin off Red River Talc, saddling it with the liability for approximately 60,000 talc-related cancer claims. The maneuver, viewed by critics as a corporate sleight of hand, led to Red River’s bankruptcy filing last September, seeking court approval for the massive payout.
