Johnson & Johnson has agreed to pay $US8.9 billion ($13.1 billion) to settle tens of thousands of lawsuits alleging that talc in its iconic baby powder and other products caused cancer. 

The agreement follows an appeals court ruling in January invalidating J&J’s controversial “Texas two-step” bankruptcy manoeuvre, in which it sought to offload the talc liability onto a subsidiary that immediately filed for bankruptcy.

The J&J subsidiary, LTL Management, filed for bankruptcy protection late on Tuesday for a second time with the intent to present a reorganisation plan containing the proposed settlement to a judge as soon as May 14, the subsidiary said.

J&J said in a statement that about 60,000 talc claimants had agreed to the proposal.

J&J crafted new financing arrangements with its subsidiary to avoid running afoul of the appeals ruling, the subsidiary said in a court filing.

The ruling determined LTL Management had no legitimate claim to bankruptcy because it was not in financial distress.

The appeals court rejection effectively raised the price tag for J&J to rid itself of the sprawling talc litigation, after plaintiffs’ lawyers had resisted the company’s tactics and prevailed.

J&J’s board met over the weekend and approved paying $US8.9 billion rather than the original offer of $US2 billion to current and future plaintiffs with various gynaecological cancers and mesothelioma, according to Mikal Watts, one of the plaintiffs’ lawyers who negotiated the agreement.

J&J reiterated on Tuesday that its talc products are safe and do not cause cancer.

Company lawyers said talc claims lacked scientific merit and accused plaintiffs’ lawyers of continuing to advertise for clients in the hopes of extracting large financial sums.

The company still faces significant risk that other plaintiffs could continue to oppose the settlement and appeal the case again to the same court that has already rejected the subsidiary bankruptcy.

Attorneys representing thousands of plaintiffs issued a release on Tuesday opposing the settlement.

Judge dismisses previous bankruptcy 

Under terms of the newly proposed settlement, plaintiffs diagnosed with cancer before April 1 would be paid from a bankruptcy trust within one year of a judge approving the Chapter 11 bankruptcy plan, according to Mr Watts said. 

Plaintiffs diagnosed later will have access to money set aside in the trust for the next 25 years.

The massive settlement emerged after the legal failure of J&J’s original Texas two-step bankruptcy, filed in October 2021.

The novel tactic involved using a Texas state law to divide a company being sued into two, then shifting liability to one of the newly created entities.

LTL Management, the new subsidiary that absorbed the liability, declared bankruptcy almost immediately after it was created.

Plaintiffs lawyers portrayed J&J’s two-step as an abuse of the bankruptcy system by a multinational conglomerate with a market capitalisation exceeding $US400 billion and in little danger of running out of money to pay cancer victims.