Johnson & Johnson is weighing whether to spin off liabilities from the numerous lawsuits brought against it over the company’s iconic baby powder into a new business that would then seek bankruptcy protection.
The plan could allow the company to pay out lower amounts for cases that don’t settle before the move, Reuters reported Sunday, citing people familiar with the discussions.
Lawyers for those suing the company would not be able to immediately stop Johnson & Johnson from making the move, though they could challenge it later.
Johnson & Johnson has not yet decided whether to pursue the bankruptcy plan and could abandon the idea, Reuters added, citing some of the seven people who spoke on the matter.
“Johnson & Johnson Consumer Inc. has not decided on any particular course of action in this litigation other than to continue to defend the safety of talc and litigate these cases in the tort system, as the pending trials demonstrate,” J&J’s consumer unit said in a statement to Reuters.
The news comes as Johnson & Johnson faces thousands of lawsuits filed in recent years alleging that its iconic talc-based baby powder is laced with asbestos and can cause cancer or mesothelioma.
The company last year halted sales of the product and has recently socked away $3.9 billion to help cover the costs of the lawsuits.
Last month, the US Supreme Court rejected Johnson & Johnson’s bid to overturn a $2.1 billion verdict against it in favor of women who said the company’s talc products played a role in their developing ovarian cancer.
The company has repeatedly denied that its products can be linked to cancer.
When it stopped selling its baby powder in the US and Canada last year, the company said the decision to discontinue the product was due to falling demand “fueled by misinformation around the safety of the product and a constant barrage of litigation advertising.”
Last year, a US-led analysis of 250,000 women found no strong evidence linking baby powder with ovarian cancer, though the study’s lead author called the results “very ambiguous.”
An editorial published in January 2020 in the Journal of the American Medical Association called the findings “overall reassuring.” The study wasn’t definitive but conclusive research probably isn’t feasible due to a drop in women using the products, the editorial said.