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.

This marks J&J’s third attempt at using Chapter 11 to resolve talc claims. Two previous bankruptcy filings through another spinoff, LTL Management, were shot down by the Third Circuit Court of Appeals, which ruled that J&J was not in financial distress and had filed in bad faith.

A Turning Point in the Fight for Compensation

According to Lenard Parkins, counsel for a committee of supporting claimants, initial opposition to J&J’s first bankruptcy bid was widespread. But after the Third Circuit rejected the maneuver, a shift occurred.

“The parties said let’s dig deeper, let’s get to a deal,” Parkins said.

In August, J&J sweetened the pot, boosting the proposed settlement with an additional $1.1 billion earmarked for urgent claims and $650 million for plaintiffs’ attorneys.

“Trials almost always yield nothing,” Brown argued, dismissing a $4.7 billion 2019 Missouri verdict against J&J as an outlier. The proposed deal, she contended, was the best possible outcome for claimants.

The Vote Controversy: Was the Process Fair?

Despite Red River’s claim of overwhelming support, opposition remains vocal. Coalition of Counsel for Justice for Talc Claimants, a group of dissenting attorneys, called foul on the voting process.

Attorney Adam C. Silverstein alleged that the 75% approval threshold set by J&J was only met after a deal was struck with the Smith Law Firm to switch 1,500 votes from no to yes—a move he claimed happened without direct input from claimants.

“This is a blatant double standard,” Silverstein argued.

Meanwhile, U.S. Trustee’s Office counsel Linda Richenderfer urged the court to scrap the vote and start over, citing concerns about improper solicitation outside the bankruptcy framework.

“The voting system here is going to be the poster child for why you shouldn’t do solicitation outside of bankruptcy,” she said.

Bad Faith Allegations and Third-Party Releases

Critics argue the case should be thrown out just like J&J’s previous bankruptcy attempts. Red River has no employees or operations, opponents claim, proving that J&J can afford to pay its liabilities without using bankruptcy as a shield.

“The reason we’re here today is Johnson & Johnson doesn’t trust the process,” Silverstein declared. “They’re busting the process.”

Adding fuel to the fire, opponents claim the plan’s third-party releases are too broad, shielding not just J&J but also retailers who sold its talc products. Another red flag? A clause allowing J&J to walk away from the settlement if fewer than 95% of claimants agree to the releases within 120 days of plan confirmation.

Insurers Join the Fight

Johnson & Johnson’s own insurers have jumped into the fray, challenging the plan’s fairness. Travelers, represented by Lynn Neuner, argued that J&J is transferring insurance policies to Red River without consent, leaving insurers footing a larger bill than they would in the traditional court system.

The Road Ahead

The hearing is set to resume Wednesday and continue through February 28, as both sides brace for a potentially precedent-setting ruling. With billions of dollars and thousands of lives impacted, the outcome could reshape the legal landscape for corporate liability settlements.