bankruptcy court

J&J Is Left Weighing Options After Second Talc Bankruptcy Tossed

Johnson & Johnson may be forced to pivot to other legal avenues to resolve tens of thousands of cancer claims after its latest bankruptcy court setback.

J&J cannot use the bankruptcy of its subsidiary, LTL Management LLC, to settle claims that its talc-based products, like baby powder, caused cancer, Judge Michael Kaplan of the US Bankruptcy Court for the District of New Jersey ruled July 28.

The ruling leaves J&J boxed out of its preferred venue to settle the claims, although the company said it would appeal. Aside from an appeal, J&J can settle individual claims, negotiate with plaintiff firms or pursue a global settlement.

J&J didn’t immediately respond to a request for comment. Lawyers pursuing claims against the company are weighing next steps, and some have said they are continuing to discuss a resolution with J&J.

Although it would be more challenging for the company to resolve all claims through mass tort litigation,“there are ways of resolving this outside of bankruptcy,” said Otterbourg PC attorney Adam Silverstein, who represents the official committee of claimants in the LTL bankruptcy.

LTL was not in “imminent and immediate financial distress” and therefore did not qualify for the benefits of bankruptcy, Kaplan ruled.

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August 4, 2023 by ATTORNEY

Judge Who Axed J&J Bankruptcy Move Handed Biden a Vacancy

When Tom Ambro got a call from a friend in 1990 who mentioned “eleven-ten,” he thought it was a reference to the time rather than the section of the bankruptcy code that covers airplanes.

Ambro, then a transactional lawyer at Richards Layton & Finger in Wilmington, Del. agreed to represent aircraft financiers in Continental Airlines’ second bankruptcy.

That case, which he later argued before the US Court of Appeals for the Third Circuit, altered the trajectory of Ambro’s career, pivoting his focus to bankruptcy. He ultimately returned to the Third Circuit as a judge, where he is perhaps the foremost authority on bankruptcy law sitting on any federal appeals court.

“He’s probably forgotten more bankruptcy than many circuit judges will hope to learn,” said Bruce Markell, a former bankruptcy judge who now teaches at Northwestern University.

Ambro, 73, is still making a mark even after recently taking senior status, penning the decision that struck down a Johnson & Johnson subsidiary’s bankruptcy earlier this year.

He may not have semi-retired at all if not for the election of fellow Delawarean Joe Biden, who had shepherded Ambro’s nomination through the Senate 20 years ago. By taking senior status, Ambro handed his

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July 22, 2023 by ATTORNEY

Attorney’s Fees For Fraudulent Transfer Deemed Not Dischargeable

One of the most interesting and talked about creditor-debtor — and thus asset protection — cases in recent years was the one which was the subject of my article Lawyer, Law Firm And Bank Exposed To Civil RICO And Other Liability For Assisting A Debtor Post-Claim In Kruse (Nov. 24, 2021). As the article title suggests, this case involves a debtor who engaged in a number of transfers after a car wreck with the specific purpose of defeating the judgment enforcement rights of the very seriously injured victim in that accident. Today, we examine a subsequent ruling in that case which further illustrates that post-claim planning can not only fail, but also put the debtor in a much worse position than if nothing had been done at all.

Christina Kruse won a judgment in excess of $2.5 million against Steven Weller arising out of a auto accident. Later, Kruse brought a fraudulent transfer lawsuit against Weller and others to set aside Weller’s post-claim transfers of his assets to family member and a newly-created LLC. The Iowa state court ultimately entered an order in 2018 which set aside these fraudulent transfers. These are the background facts.

More

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July 20, 2023 by ATTORNEY

Serta’s Bankruptcy Court Win Bolsters Future for Favored Lenders

Bankrupt Serta Simmons Bedding LLC’s recent court win for a deal to get a cash infusion from creditors who were then moved up higher in payout priority bolsters other distressed companies’ odds of pursuing the controversial debt restructuring tactic.

The US Bankruptcy Court for the Southern District of Texas’s June decision is the first time a court ruled on the merits on the so-called debt liability management deals that have spurred lender-on-lender disputes, attorneys said.

The issue has come up before, both in and out of bankruptcy cases. But Judge David R. Jones’ opinion in Serta’s Chapter 11 could embolden more companies and lenders to employ the strategy in the estimated $1.4 trillion market for syndicated commercial loans.

“It is somewhat of a momentous ruling,” said Jennifer Taylor, a partner at O’Melveny & Myers LLP.

Among the companies that have similarly controversial debt management deals and sought bankruptcy in Houston are Incora, Diebold Nixdorf, and KKR Co.’s Envision Healthcare Corp.

TPC Group, J. Crew, and Neiman Marcus have also pursued deals and landed in bankruptcy.

Open-Market Purchase

Serta, one of the largest US bedding makers and distributors in North America, filed for Chapter 11 in January with about $1.9 billion

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July 4, 2023 by ATTORNEY

3M Unit Bankruptcy Toss Is Second Blow to Mass Tort Defense Play

The termination of 3M Co. unit Aearo Technologies LLC’s bankruptcy casts fresh doubt on the tactic of using Chapter 11 bankruptcy as a legal strategy in mass tort litigation, likely emboldening plaintiffs.

The June 9 decision from Judge Jeffrey J. Graham of the US Bankruptcy Court for the Southern District of Indiana hewed closely to the US Court of Appeals for the Third Circuit’s analysis earlier this year in its dismissal of a Johnson & Johnson subsidiary’s bankruptcy on similar grounds.

The two rulings are a pair of major setbacks for solvent companies eyeing bankruptcy to handle mass tort liabilities—a practice that has seen substantial growth in recent years.

Graham’s decision, along with the Third Circuit’s ruling on J&J unit LTL Management LLC, creates “hurdles that may be absent from the bankruptcy code,” said attorney Douglas Mintz of Schulte Roth & Zabel LLP.

“I think the biggest application here is it will empower plaintiffs to push more aggressively outside of bankruptcy and leave tort defendants with fewer tools in their toolbox or less certainty that one of the tools will work,” Mintz said.

Graham held that Aearo’s attempt to use bankruptcy to settle approximately 230,000 lawsuits over allegedly defective military

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June 15, 2023 by ATTORNEY
May 2024
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