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Well, they could spin off a new company that owns the liability. That sometimes works, although notably courts did not allow Johnson & Johnson to get away with
by sp332 4y ago
Well, they could spin off a new company that owns the liability. That sometimes works, although notably courts did not allow Johnson & Johnson to get away with something similar recently. Details https://www.npr.org/2022/09/19/1123567606/johnson-baby-powder-bankruptcy-lawsuits https://www.npr.org/2022/09/19/1123567606/johnson-baby-powde... Rejection https://www.cnn.com/2023/01/30/business/johnson-and-johnson-talc-bankruptcy/index.html https://www.cnn.com/2023/01/30/business/johnson-and-johnson-...
- JamesCoyne 4y agoLitigator of the year https://twitter.com/AmericanLawyer/status/1595103437229735937 https://twitter.com/AmericanLawyer/status/159510343722973593...
- ccooffee 4y ago> Before the bankruptcy filing, J&J faced costs from $3.5 billion in verdicts and settlements, including one in which 22 women were awarded a judgment of more than $2 billion, according to bankruptcy court records. Around the same time as the LTL shenanigans, on 2022-09-14 J&J announced a $5billion stock buyback[0]. It's not that J&J didn't have the money which led them to do the "Texas two-step" and push liability to their soon-to-declare-bankruptcy LTL subsidiary. They just wanted to line their pockets with the money instead. Isn't that pleasant. [0] https://www.jnj.com/:~:text=NEW%20BRUNSWICK,%20N.J.,%20Sept.,the%20resilience%20of%20Johnson%20&%20Johnson https://www.jnj.com/:~:text=NEW%20BRUNSWICK,%20N.J.,%20Sept.....
- NotYourLawyer 4y agoNone of this strikes me as nefarious. The point of the bankruptcy filing wasn’t to bilk creditors. It was to get them all equal payouts instead of a bunch of random jury-dependent judgment amounts.
- vkou 4y agoThe problem with doing something illegal is that the consequences of your actions include having to pay out a bunch of random jury-dependent judgement amounts.
- NotYourLawyer 4y agoGreat, if you’re in the first random set of plaintiffs who get billions of dollars. Not so great if you’re a later plaintiff when the money’s all gone and the company is bankrupt for real.
- NotYourLawyer 4y agoThe problem in that case was the bankruptcy filing, not the spinoff. The judge said the spun-off company wasn’t bankrupt.