Consumer products maker Johnson & Johnson (NYSE:JNJ) has been fighting a running battle over talc for years now. Its latest attempt to protect itself from the fallout included establishing an entire spinoff unit just to take the cases. Now, there’s new pushback against that strategy, and Johnson & Johnson is once again on the firing line. However, investors don’t seem overly concerned; Johnson & Johnson stock is up slightly in Tuesday afternoon trading.
Johnson & Johnson’s backup plan started back in 2021 when it established LTL Management Inc, an arm of the company that would take on all of the talc lawsuit liabilities. Johnson & Johnson would then file for bankruptcy on the unit’s behalf and allow the lawsuits to be settled in bankruptcy court, a move that some refer to as the “Texas Two-Step.” Needless to say, that didn’t sit well with those filing suit, and now, a group of claimants, or perhaps rather their lawyers, is trying to get that bankruptcy protection blocked by District of New Jersey Bankruptcy Court Judge Michael Kaplan.
The attempt to shift to bankruptcy court wouldn’t have left claimants out of pocket, though; Johnson & Johnson planned to fund LTL Management with $8.9 billion to settle claims. That represented a huge increase over the original settlement fund of just $2 billion. Yet claimants still believe this was all clearly a dodge and a grave misuse of the Chapter 11 bankruptcy concept. Further, claimants also believe that the new arrangement is effectively a “fraudulent transfer” as the move limits the total amount available for claims.
Thankfully, Johnson & Johnson has a lot else going on, and analysts are behind it. JNJ stock is considered a Moderate Buy thanks to four Buy recommendations and 10 Holds. With an average price target of $179 per share, it also enjoys a modest 8.98% upside potential.
