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As the Levine article explained, and as has been reiterated several times in this comment thread: J&J is not "freed from the shackles of any liability", becaus

As the Levine article explained, and as has been reiterated several times in this comment thread: J&J is not "freed from the shackles of any liability", because it is still liable to its own subsidiary for the talc lawsuit claims, up to the full value of J&J itself (the parent company).

londons_explore 3y ago
So how come J&J just paid a dividend? Shouldn't that money be being given to claimant's?
- respondo2134 3y ago
  They haven't settled yet. You don't pay out while the case is being worked out, and paid to the claimant's what?
- bagacrap 3y ago
  In a sense, the claimants are becoming shareholders of this company. That is, like shareholders, they have a claim to a certain portion of future cash flows. Like shareholders, they should be hoping that the business continues to thrive so that their claims can be paid out. The decision not to cut dividends in the face of an earnings shock is a pretty common one and not generally a sign of an executive team attempting to enrich themselves. It's more of a sign to shareholders that the executive team has faith in the robustness of the business, which helps if the goal is to survive the present difficulties.
  - FireBeyond 3y ago
    > In a sense, the claimants are becoming shareholders of this company. That is, like shareholders, they have a claim to a certain portion of future cash flows. Like shareholders, they should be hoping that the business continues to thrive so that their claims can be paid out. This is an extremely perverse incentive and shows how fundamentally broken some of these mechanics are. "You injured me, and need to compensate me. But in order to do so I have to hope you continue to prosper, potentially injuring others along the way, so I get my compensation. I can choose between getting you shut down, but potentially not being compensated, or being compensated but knowing that you go on to be able to do this to others."
unyttigfjelltol 3y ago
Sorry, it's a game of three-card monte. Glad Matt is confident he can play and win, always the optimist.
- somenits 3y ago
  Are you proud of your ignorance? Seems like you're not interested in understanding, just in continuing to feel outraged.
  - unyttigfjelltol 3y ago
    Would you have preferred I refer to a shell game rather than "three card monte." I do confess some ignorance of street hustle lingo. Or, maybe the street people have already switched to simply calling it the "bad bank game?"
  - unyttigfjelltol 3y ago
    Ok, no "outrage" here @somenits. This is a variation on a "bad bank" scheme that normally is suggested only where jettisoning the toxic liabilities from the main entity will facilitate a government bailout of the resulting "bad bank". That's what makes the scheme work, normally. There isn't a bailout on the way for J+J's bad bank, and the closest suggestion of any value-creation from the manuver comes from disassociating the consumer brand from consumer injuries they allegedly caused. However, that doesn't sound like a compelling case for such a remarkable corporate manuver. So then, what we are left with is a "bad bank" scheme that is devoid of a compelling legitimate justification, which you yourself do not offer. This naturally raises an inference that J+J hopes to cram down tort claims via the maneuver. Perhaps the cram-down is in administrative overhead associated with litigation. Maybe it's some kind of mismatch in claim acceptance or approval criteria. None of the materials explain, and while I adore Matt's writing the bottom line is it looks like a shell game and that's from someone with no "outrage" whatever involved.

londons_explore 3y ago

So how come J&J just paid a dividend? Shouldn't that money be being given to claimant's?

respondo2134 3y ago
They haven't settled yet. You don't pay out while the case is being worked out, and paid to the claimant's what?
bagacrap 3y ago
In a sense, the claimants are becoming shareholders of this company. That is, like shareholders, they have a claim to a certain portion of future cash flows. Like shareholders, they should be hoping that the business continues to thrive so that their claims can be paid out. The decision not to cut dividends in the face of an earnings shock is a pretty common one and not generally a sign of an executive team attempting to enrich themselves. It's more of a sign to shareholders that the executive team has faith in the robustness of the business, which helps if the goal is to survive the present difficulties.
- FireBeyond 3y ago
  > In a sense, the claimants are becoming shareholders of this company. That is, like shareholders, they have a claim to a certain portion of future cash flows. Like shareholders, they should be hoping that the business continues to thrive so that their claims can be paid out. This is an extremely perverse incentive and shows how fundamentally broken some of these mechanics are. "You injured me, and need to compensate me. But in order to do so I have to hope you continue to prosper, potentially injuring others along the way, so I get my compensation. I can choose between getting you shut down, but potentially not being compensated, or being compensated but knowing that you go on to be able to do this to others."

unyttigfjelltol 3y ago

Sorry, it's a game of three-card monte. Glad Matt is confident he can play and win, always the optimist.

somenits 3y ago
Are you proud of your ignorance? Seems like you're not interested in understanding, just in continuing to feel outraged.
- unyttigfjelltol 3y ago
  Would you have preferred I refer to a shell game rather than "three card monte." I do confess some ignorance of street hustle lingo. Or, maybe the street people have already switched to simply calling it the "bad bank game?"
- unyttigfjelltol 3y ago
  Ok, no "outrage" here @somenits. This is a variation on a "bad bank" scheme that normally is suggested only where jettisoning the toxic liabilities from the main entity will facilitate a government bailout of the resulting "bad bank". That's what makes the scheme work, normally. There isn't a bailout on the way for J+J's bad bank, and the closest suggestion of any value-creation from the manuver comes from disassociating the consumer brand from consumer injuries they allegedly caused. However, that doesn't sound like a compelling case for such a remarkable corporate manuver. So then, what we are left with is a "bad bank" scheme that is devoid of a compelling legitimate justification, which you yourself do not offer. This naturally raises an inference that J+J hopes to cram down tort claims via the maneuver. Perhaps the cram-down is in administrative overhead associated with litigation. Maybe it's some kind of mismatch in claim acceptance or approval criteria. None of the materials explain, and while I adore Matt's writing the bottom line is it looks like a shell game and that's from someone with no "outrage" whatever involved.