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Cancer patients lose attempt to stop J&J talc bankruptcy Reuters

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Brendan Pearson

(Reuters) – A federal judge on Friday rejected a cancer patient group’s attempt to block Johnson & Johnson (NYSE:) from moving forward with a bankruptcy settlement for tens of thousands of lawsuits alleging its baby powder and other talc products contain carcinogenic asbestos.

Cancer patients on June 11 sought a temporary injunction in New Jersey to block J&J from filing for bankruptcy outside the state, which would effectively derail the proposed $6.48 billion settlement. The motion was part of a class-action lawsuit filed by plaintiffs’ lawyers opposing the proposed settlement.

But U.S. District Judge Michael Shipp said Friday he could not grant the motion because any harm to the victims was “purely hypothetical.” The judge said he did not have the authority to resolve disputes over “events that have not happened and may never happen.”

Lawyers for the plaintiffs did not immediately respond to a request for comment late Friday.

J&J hopes to win the support of 75% of filers as part of a packaged bankruptcy plan. The deadline for voting is set for July 26.

The health care conglomerate faces lawsuits from more than 61,000 plaintiffs who claim talc causes ovarian cancer and mesothelioma, a deadly cancer linked to asbestos exposure.

J&J maintains that its talc is safe, does not contain asbestos and does not cause cancer. The company argues that the bankruptcy settlement will fairly and equitably compensate plaintiffs, as opposed to the civil justice system, where most plaintiffs get nothing and some win exorbitant amounts.

Plaintiffs’ lawyers oppose the plan, arguing it is a fraudulent attempt to put billions of dollars of the company’s assets out of reach to plaintiffs and deny them the compensation they are entitled to.

J&J has twice failed to enter bankruptcy proceedings aimed at ending current and future talc litigation.

The strategy, known as Texas Two-Step, involved setting up a subsidiary to absorb J&J’s talc debt, then having that subsidiary resolve the problem by declaring bankruptcy. Two courts have so far found that J&J’s subsidiaries lacked the “financial distress” necessary to justify filing for bankruptcy.

J&J’s plan is focused on resolving bankruptcy lawsuits from women with ovarian and other gynecologic cancers suspected to be linked to talc. The company has settled most of its mesothelioma lawsuits outside of bankruptcy and this month reached a separate $700 million agreement to settle lawsuits from state attorneys general.

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