Johnson & Johnson may split into two companies to offload its Baby Powder liabilities and seek bankruptcy protection, according to seven people familiar with the matter.
Some sources told Reuters exclusively J&J could use a Texas “divisive merger” law which allows a company to split into two entities.
One would be for its Baby Powder and other talc products, which tens of thousands of plaintiffs allege contained asbestos and caused cancer.
J&J’s newly split company could then pursue bankruptcy, which may result in lower payouts for cases that have not been settled.
Plaintiffs’ lawyers view the move as one that skirts potentially expensive settlements, while companies view it as a way to confine many lawsuits to one court.
In a statement to Reuters, a J&J talc product subsidiary said the company “has not decided on any particular course of action in this litigation other than to continue to defend the safety of talc.”
Some sources have said J&J could ultimately abandon the idea altogether.
A 2018 Reuters investigation found J&J knew for decades that a known carcinongen, asbestos, lurked in its Baby Powder and other talc products.
The company stopped selling Baby Powder in the U.S. and Canada in May last year, but maintains its products are safe and asbestos-free.
It now faces legal actions from more than 30,000 plaintiffs, including women battling ovarian cancer and mesothelioma.