Failed Bankruptcy Scheme Sparks Nationwide Backlash
In January 2025, U.S. Bankruptcy Judge Christopher Lopez rejected Johnson & Johnson’s third attempt to resolve the talc litigation through a divisive legal strategy known as the “Texas Two-Step.” Under this maneuver, the pharmaceutical giant funneled its talc liabilities into a newly created subsidiary—LTL Management—which then filed for Chapter 11 protection.
J&J hoped to use bankruptcy court to limit its financial exposure and settle the claims globally. But Judge Lopez ruled that the proposed settlement violated due process rights, citing an improper voting structure and unlawful protections for non-bankrupt affiliates.
The ruling dismantled what many viewed as a corporate end-run around accountability.
Firm founder Majed Nachawati said J&J has used the bankruptcy system “as a tool to delay and deny justice.”
“Our recent talc ovarian cancer filings in DC and Florida are direct messages to Johnson & Johnson and the sellers of talc-based products of our willingness and eagerness to resume the fight on behalf of our clients,” said trial lawyer Charlie Stern in a statement.
