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Bankruptcy Filed By J&J Talc Supplier Over Court Cases Over Lawsuits

Bankruptcy Filed By J&J Talc Supplier Over Court Cases Over Lawsuits
The multibillion-dollar lawsuits against Johnson & Johnson’s baby powder alleging that the product was the cause of ovarian cancer asbestos-related mesothelioma has resulted in one of the important suppliers of the product filing for Chapter 11 bankruptcy this week.
According to a statement issued by the supplier, Imerys Talc America which is a U.S. based subsidiary of French group Imerys SA, the company does not have the financial power to fight the almost 15000 cases filed in relation to talc mineral product - which is also used in cosmetics.
While claiming that there was little or no merit in the lawsuits, Imerys said that the decision for filing of bankruptcy was made because of the huge amounts that could possibly be involved in arriving at numerous settlements and in costs for fighting the cases in court.
The company also was pushed to take the decision because of a court ruling on the issue against Johnson & Johnson and the media attention that was given to the case.  J&J had been ordered to pay up $4.69 billion to 22 women in fines by a Missouri jury in July last year, the women had filed law suits alleging that the J&J baby powder was the cause of ovarian cancer. J&J had said that the ruling was being appealed against by it.
Prior to the trial, it had settled for an undisclosed amount, Imerys said.
A dispute over an indemnity agreement was also the case of the filing for bankruptcy, Imerys said. The company said that it was supposed to be indemnified by J&J according to some agreements but the company claimed that J&J had willingly not done so. 
All of the allegations against the baby talc have been repeatedly denied by Imerys and J&J. The companies have pointed to numerous studies and tests conducted by regulators worldwide which have ticked off the talc to be safe.
In December last year, there were media reports claiming that J&J had prior knowledge of the talc in its raw and finished powder form, had tested positive sometimes for small quantities of asbestos from between the 1970s till about the early 2000s. These test results had not been disclosed by the company to the regulators or consumers.
Its talc products do not contain asbestos, J&J has said.
The talc liability is best addressed by the bankruptcy filing, Imerys said.
By filing for bankruptcy, Imerys will have a single forum where the large number of litigations could be settled. This is also the strategy that had been used by many companies who had previously faced multiple court cases with regards to alleged faulty breast implants, products with asbestos contamination and recalled automotive airbags.
According to records filed with the Delaware Bankruptcy Court, the total revenue in 2018 for Imerys Talc America was $174 million. The bankruptcy would be used by Imerys to create a bonding of trust for making payments for personal injury claims, the company said in court documents. This is typically the strategy according to experts, which companies take in order to settle disputes related to asbestos contamination.

Christopher J. Mitchell

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