Deep Dive: Judge DEMOLISHES Johnson & Johnson $10 Billion Cancer Escape Plan in Courtroom Smackdown…

Stop me if you’ve heard this one before: Johnson & Johnson tries to offload its cancer-linked talcum powder liabilities into a shell company, files for bankruptcy, and gets laughed out of court. For the third time. Because nothing says “we totally didn’t do anything wrong” like trying to pay billions in hush money through a legal backdoor specifically engineered to dodge jury trials.

(Source: Giphy) 

In short, a Texas judge slammed the door—again—on J&J’s latest $10 billion attempt to settle tens of thousands of lawsuits via a prepackaged Chapter 11, this time through its sacrificial liability sponge of a subsidiary, Red River Talc LLC. The company’s pitch was simple: “Let us dump this into bankruptcy court, pay out $9 billion, and move on.” Judge Christopher Lopez’s response? Hard pass. He cited a “flawed process” for how J&J solicited votes from claimants—aka, the whole thing smelled like legal gaslighting in a courtroom.

To recap: J&J has now tried three times to use bankruptcy court to resolve lawsuits from people alleging its talc-based baby powder caused ovarian cancer and mesothelioma. The first two attempts went down in flames—one in New Jersey for not showing “financial distress” (because, you know, it’s still a $360 billion company), and now this one in Texas got curb-stomped for procedural jankiness.

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Naturally, investors did not love the news. J&J shares dropped 7% Tuesday, their worst single-day performance in years presumably because when your go-to legal strategy is to “pretend” your broke, and you’re not, the market tends to call bullsh*t. 

What’s more, is that this isn’t some minor product liability case. This is one of the largest mass tort situations in U.S. history. Tens of thousands of people allege that J&J’s talc products caused cancer. The company stopped selling talc-based baby powder in the U.S. back in 2020, and globally in 2022, but the damage was already done. What’s even more wild is how aggressively J&J keeps claiming innocence—while simultaneously trying to write billion-dollar checks to make it all go away. In its Tuesday statement, the company reminded everyone it had won 16 of its last 17 cases (sounds legit), and that it would now “return to the civil justice system to litigate and defeat these meritless claims.”

(Source: Reuters) 

Oh, and by the way, the company also said it plans to reverse about $7 billion of a reserve it had set aside for the settlement. So again, if you’re tracking this at home: That’s crystal clear evidence that J&J tried to make this go away quietly with a fat check and a bankruptcy loophole. The courts said no. Now it’s back to trial-by-fire, and the financial cleanup is just getting started. 

But, but, but, don’t you worry cash-strapped investors, because J&J went ahead and dropped that its acquisition of Cellular Therapies will ding shareholders for $0.25 a share in 2025. So, while the legal department tries to dodge flaming class-action debris, the finance team is busy prepping investors for more “short-term headwinds,” aka wallet pain LOL.

(Source: Giphy) 

In the end, J&J thought they could weasel their way out with a bankruptcy hoax—but instead, got absolutely rekt by a judge who refused to let one of America’s richest companies pretend to be poor for PR convenience. And now, with the bankruptcy door slammed closed (again), it’s back to the civil courts—where things get messy, expensive, and, oh yeah, public. Meaning, good luck J&J (and investors). You’re going to need it.

For now, keep your eyes on this sh*t show, and place your bets accordingly. As always, stay safe and stay frosty, friends! Until next time… 

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Stocks.News holds positions in Johnson and Johnson as mentioned in the article.