The question is no longer simply how much Johnson & Johnson is offering, but whether a solvent parent should be permitted to use bankruptcy to resolve mass-tort liability while remaining outside bankruptcy itself.

Johnson & Johnson has again returned to bankruptcy court in an effort to resolve the largest remaining share of talc‑related ovarian‑cancer claims—this time with a proposed settlement valued at approximately $6.5 billion, to be paid over 25 years. The plan relies on a now‑familiar maneuver: placing talc liability into a specially created subsidiary and seeking relief under Chapter 11 through what has come to be known as the “Texas Two‑Step.” 
 
Whether this effort succeeds may turn less on the total dollar figure than on a deeper legal question that has divided courts, regulators, plaintiffs’ counsel, and restructuring professionals: should a solvent parent company be permitted to use bankruptcy as a forum for resolving mass‑tort liability while remaining outside bankruptcy itself? 

A Brief Procedural Recap 

Under the Texas Two‑Step, a company separates its operations through a divisional merger under Texas law, assigning mass‑tort liabilities to a newly created entity while the operating business remains intact. The liability‑holding entity then files for bankruptcy and asks the court to channel current and future claims into a centralized resolution process. 

Johnson & Johnson first attempted this strategy in 2021 through a subsidiary called LTL Management. After that effort and a subsequent filing were dismissed, the company tried again in September 2024 through Red River Talc LLC, a newly created affiliate that filed Chapter 11 in the Southern District of Texas. That case was assigned to U.S. Bankruptcy Judge Christopher M. Lopez. 

The company argues that bankruptcy offers a more efficient and equitable forum than decades of piecemeal litigation scattered across state and federal courts. Plaintiffs’ lawyers opposing the filing counter that the strategy is an abuse of bankruptcy law designed to cap liability and restrict jury trials—without the financial distress that traditionally justifies Chapter 11 relief. 

Claimant Votes and Competing Narratives 

One difference between the current proposal and earlier efforts is Johnson & Johnson’s reliance on claimant voting to demonstrate support. The company has said that more than 75% of voting claimants approved the proposed settlement structure—an important statutory threshold for confirmation of a prepackaged plan. 

Some plaintiffs’ attorneys have publicly supported the deal, particularly for clients who are elderly or seriously ill and face the prospect of prolonged litigation. Others have urged claimants to reject the plan, arguing that bankruptcy would strip plaintiffs of meaningful leverage and undervalue claims that might otherwise reach juries. 

This split within the plaintiffs’ bar has been a defining feature of the talc bankruptcy fight: the disagreement is not about whether victims deserve compensation, but how—and in what forum—that compensation should be determined. 

Judicial and Regulatory Skepticism 

Federal courts have repeatedly questioned whether Johnson & Johnson’s talc subsidiaries belong in bankruptcy at all. In earlier rulings, courts emphasized that Chapter 11 is intended for companies in genuine financial distress, not for solvent enterprises seeking to manage litigation risk. 

That skepticism has been echoed by the U.S. Trustee Program, the Department of Justice unit charged with protecting the integrity of the bankruptcy system. In prior filings, the Trustee has argued that Johnson & Johnson’s talc bankruptcies lacked a legitimate bankruptcy purpose and were designed primarily to benefit the non‑debtor parent. 

Those objections place the current settlement effort squarely within a broader national debate—one also playing out in opioid, earplug, and environmental cases—about the limits of bankruptcy as a mass‑tort resolution tool. 

Where did this begin? 

The talc litigation did not begin in bankruptcy court. For years, claims proceeded through individual trials and coordinated proceedings, including MDL‑2738 in the District of New Jersey, which consolidated tens of thousands of federal cases alleging that perineal use of talc products caused ovarian cancer. 

Several jury verdicts—most notably a 2018 Missouri verdict involving 22 plaintiffs—brought national attention to the litigation, even as appellate courts reduced those awards on jurisdictional and constitutional grounds. As litigation volume grew and verdict risk increased, Johnson & Johnson ultimately discontinued the sale of talc‑based baby powder in North America in 2020 and globally by 2023, while continuing to deny that its products cause cancer. 

By the time Johnson & Johnson turned to bankruptcy, the talc docket had already tested nearly every traditional mass‑tort mechanism: bellwether trials, global negotiations, appellate review, and MDL coordination. Bankruptcy did not replace those processes—it interrupted them. 

What does this case signal beyond talc? 

Whether the Red River Talc effort survives or fails will likely influence how future mass‑tort defendants assess “creative” bankruptcy strategies. Courts reviewing the talc filings have been forced to confront foundational questions: 

• How much financial distress is required for Chapter 11 access? 

• What limits apply to third‑party releases? 

• Can bankruptcy be used primarily as a litigation‑management tool? 

The answers are unlikely to affect talc alone. 

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