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Johnson & Johnson supplier seeks bankruptcy over talc lawsuits

Reuters 

By and Tom Hals

(Reuters) - A key supplier of used in filed for Chapter 11 bankruptcy on Wednesday in the wake of multibillion-dollar lawsuits alleging its caused ovarian and asbestos-related

America, the U.S. unit of French group SA, said it filed for bankruptcy because it lacks the financial clout to defend against nearly 15,000 lawsuits over its mineral product, which is also used in cosmetics.

said that while it continued to believe the lawsuits are without merit, the prospect of rising settlement and defense costs over the next few years prompted the decision to file for bankruptcy.

They also cite a multibillion-dollar verdict against and the ensuing as factors that led to the Chapter 11 filing.

In July, a jury ordered J&J to pay a record $4.69 billion (3.65 billion pounds) to 22 women who said in talc caused ovarian J&J has said it is appealing that verdict.

Imerys said it had settled for an undisclosed amount prior to the trial.

Imerys also attributed its filing to a dispute over an indemnity agreement. Imerys said some of its supply agreements required J&J to indemnify Imerys, but it said the U.S. had refused to do.

Imerys and J&J have repeatedly denied the allegations about talc, saying numerous studies and tests by regulators worldwide have shown their talc to be safe.

J&J on Wednesday declined to comment on Imerys Talc America's Chapter 11 filing and on the allegations against it over the indemnification agreements.

on Dec. 14 published a report detailing that J&J knew that the talc in its raw and finished powders sometimes tested positive for small amounts of from the 1970s into the early 2000s - test results it did not disclose to regulators or consumers.

J&J has said that its do not contain

Imerys said bankruptcy provided the best avenue for addressing its talc liability.

Bankruptcy provides Imerys a single forum to settle the widespread litigation. A similar strategy has been used by numerous companies facing litigation over faulty breast implants, containing asbestos and recalled automotive airbags.

Two North American subsidiaries of Imerys, and Imerys Talc Canada, also filed for Chapter 11 on Wednesday.

Total revenue in 2018 for was $174 million, according to records filed with the

COMPANY TO ESTABLISH A TRUST

Imerys said in court documents it plans to use bankruptcy to to pay personal injury claims, a strategy typically used by companies facing asbestos claims.

When the company leaves bankruptcy, current and future litigation claims will be channeled to the trust rather than Imerys, which would be freed from future lawsuits over talc.

Imerys could finance the trust with the disputed indemnity agreement with J&J and its right to insurance proceeds, which the company estimated could be worth around $700 million. It said it also has a right to an undetermined portion of up to $2 billion of insurance.

However, the company said some of the policies exclude asbestos claims and none of them cover claims in which the first exposure occurred after 1986. In addition, punitive damages are often not covered.

Imerys said it could exhaust some of those within the first half of this year defending cases.

Court records show that the defense of a single case can cost $4 million.

As a co-defendant with J&J, Imerys has faced at least a dozen U.S. jury trials over allegations that its talc causes ovarian or

While some juries awarded damages as high as $2.75 million against Imerys Talc America, many verdicts were later thrown out on appeal.

Imerys and J&J have also won several trials or had cases result in mistrials due to hung juries.

The verdicts against the company are all still on appeal and Imerys has not yet paid any of those verdicts. However, the company settled at least four cases before they went to trial for undisclosed amounts.

Mark Lanier, a Texas-based representing many of the talc plaintiffs, on Wednesday said Imerys Talc America's bankruptcy would not change the litigation.

"We have always targeted our cases against J&J and Colgate Palmolive, the companies that put the asbestos laced talc into the products," Lanier said.

Colgate-Palmolive is another defendant in the U.S. talc litigation. The New York-based company sold Cashmere Bouquet, a cosmetic talcum powder, from 1871 to 1995.

Colgate did not respond to a request for comment. It has denied allegations that its cause cancer.

(Additional reporting by in Bengaluru; Editing Bill Berkrot)

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Thu, February 14 2019. 05:10 IST
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