LTL Management Inc. (LTL) filed for bankruptcy protection in the Western District of North Carolina on Oct. 14, seeking to resolve thousands of talc personal injury claims filed against it in state and federal courts around the country.
LTL is a newly created unit of Johnson & Johnson. In opening day filings, LTL stated that on Oct. 12, a corporate restructuring was completed under the Texas divisive merger law. Known as the “Texas two-step,” the restructuring effectively puts Johnson & Johnson’s talc liabilities into LTL while the other entity created under the merger, New JJCI, was merged back into Johnson & Johnson. The restructuring is an attempt to allow Johnson & Johnson to deal with its talc-related liabilities in bankruptcy as opposed to the tort system.
The use of the Texas divisive merger statute by LTL follows several other asbestos defendants that have used the law to complete a quick restructuring of their businesses and file units into the bankruptcy court of the Western District of North Carolina. Previously, CertainTeed, Georgia-Pacific, and Trane used the Texas statute to restructure and file the DPMB, Bestwall, and Aldrich bankruptcies, respectively, in North Carolina.
In first-day filings, LTL stated that as of its petition date it faced more than 38,000 ovarian cancer cases (35,000 in the New Jersey MDL court) and an additional 3,300 cases pending in various state courts. LTL also reported that it faced more than 430 mesothelioma claims as of the petition date.
In its bankruptcy filings, LTL said it believes that it has insurance coverage for its talc-related claims, including primary and excess policy layers that could aggregate to as much as $1.95 billion. According to the filing, the Travelers primary and excess policies are $293 million and $563 million, respectively. LTL also reports that it believes it has excess policies totaling $1.09 billion with American International Group, Allstate Insurance Co., The Hartford, Home Insurance Co., Nationwide Indemnity Co., and North River Insurance Co.
LTL stated that its key objective of the restructuring was “to ensure that the Debtor had at least the same, if not greater, ability to fund talc-related claims and other liabilities as Old JJCI had before the restructuring.” LTL reported that under the new structure it “undeniably has more that sufficient funding to pay any legitimate cosmetic talc claims.”
The case is LTL Management LLC, No. 21-30589, W.D. N.C., Bkcy.