In a significant turn of events, a New Jersey bankruptcy judge overturned the U.S. Trustee’s decision to divide the tort committee in Johnson & Johnson’s talc spinoff Chapter 11 case. U.S. Bankruptcy Judge Michael Kaplan ruled that the Trustee’s office lacked the authority to override the original court order forming the committee.
The dispute arose when U.S. Trustee Andrew Vara disbanded the original committee, representing all individuals claiming injuries from asbestos-contaminated talc, and appointed two new committees instead: one for ovarian cancer claimants and another for mesothelioma claimants. J&J spinoff LTL Management LLC challenged this decision, arguing that the Trustee’s office overstepped its authority.
During the hearing, Judge Kaplan rejected the Trustee’s arguments, emphasizing that the court has the authority to review such decisions. While the Trustee’s office did not provide reasons for splitting the committee, Michael Klein, counsel for the mesothelioma committee, defended the decision, citing significant differences between the claimant groups.
Although reinstating the original committee may cause disruptions, Judge Kaplan’s ruling underscores the importance of adhering to legal procedures and ensuring proper representation for all parties involved. As the case progresses, creditors affected by the committee split may explore alternative avenues to safeguard their interests within the bankruptcy proceedings.
