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> this approach allows J&J to determine their maximum liability by only spinning off a certain amount to the subsidiary. This is not what they did. To quote L
by nl 3y ago
> this approach allows J&J to determine their maximum liability by only spinning off a certain amount to the subsidiary.
This is not what they did.
To quote Levine's piece:
> the box where J&J put its talc claims — could draw at least $61.5 billion from J&J to pay off those claims. The point here, the bankruptcy court concluded, was not to keep J&J from having to pay talc claims; the entire value of J&J’s consumer business was still on the line for those claims.
For emphasis: the entire value of J&J’s consumer business was still on the line for those claims
- FireBeyond 3y agoSo they weren't bankrupt, then, because they had funding available for the entirety of any claims. Which is why the judge dismissed the bankruptcy proceedings. There's more nuance though than that. > Moreover, New JJCI has agreed to fund the Debtor LLC’s Chapter 11 case and contribute $2 billion into a settlement trust for the benefit of the talc claimants as part of a Chapter 11 reorganization plan. $2B = a lot less than $61.5B. And you can guarantee that J&J (who refiled the bankruptcy proceeding within 3 hours of it being dismissed) will fight that vehemently. I like Matt Levine's reporting, but you'll forgive people for taking Bloomberg taking a pro-business position with more than a little grain of salt.
- kevinventullo 3y agoIn your heart of hearts, do you really believe that J&J wants to make things right and pay these claimants what they’re owed, or do you think J&J is trying to minimize what they pay out by any means necessary? Note that J&J shareholders likely interpret the latter as their fiduciary duty.
- themitigating 3y agoHere's the problem. Who? The CEO and eveyone near him is rich, they company going out of business won't affect them. I'm sure they'll be able to get high paying jobs. In fact the negative association with this case would have me wanting to move on
- scotty79 3y agoOwners. Behind all of the corporate management theatre are always some owners that will squeeze everyone in any way possible to protect their money.
- Hikikomori 3y agoLike pension funds?
- kevinventullo 3y agoGood point, we should never hold public companies accountable for anything because it will hurt grandpa’s pension. Think of all those poor retirees! We’re not monsters.
- themitigating 3y agoAs an investor in a company, even if it's a fund, you are part of the risk. If something fails and the pension fund is wiped out that's what happens
- kevinventullo 3y agoA large portion of the CEO’s wealth is almost certainly tied up in company equity, and this is true for the shareholders by definition. Anyway, it’s not about teaching them anything, it’s about influencing the risk/reward calculus of other companies that are considering skipping steps and releasing unsafe products.
- themitigating 3y agoI disagree about influencing the risk reward calculation because the punishment is supposed to be a deterrent. If it's just a fine then the money is like fee to do something and remember that it's not always caught. Imagine if the punishment for murder was $1 million dollars and only if I'm caught.
- 3y ago
- michaelmrose 3y agoWouldn't the spin off and it's executives installed specifically for this maneuver have to initiate the lawsuit to pay unfunded liabilities? Isn't the alternative of directly attacking j&js resources made fantastically harder and more uncertain? The net effect of which is to make claimants more likely to choose the safe path of accepting the figure chosen by the guilty party rather than letting judge or jury directly decide.