Johnson & Johnson faces intense scrutiny and criticism following a contentious move to shield itself from approximately 38,000 lawsuits implicating its talc baby powder in asbestos-related cancers. Employing a Texas state law quirk, the healthcare behemoth engineered the creation of a new entity, LTL, into which it funneled all asbestos-related liabilities, subsequently filing for bankruptcy protection in a strategic bid to curtail legal repercussions.

Legal experts and consumer advocates condemn the maneuver, asserting that it obstructs justice by creating obstacles for claimants seeking recompense against the corporation. Lindsey Simon, a bankruptcy expert at the University of Georgia School of Law, decried the tactic, emphasizing its adverse impact on consumers’ ability to pursue damages against a solvent entity.

Lawmakers and consumer advocates echoed these sentiments, lambasting Johnson & Johnson for allegedly concealing asbestos contamination in its baby powder products for decades. Representative Katie Porter denounced the corporation’s actions, highlighting the plight of tens of thousands of claimants seeking accountability for alleged harm caused by the talc products.

In the face of mounting criticism, Johnson & Johnson maintains the legitimacy of its bankruptcy maneuver, with CFO Joseph Wolk asserting its adherence to established legal processes. However, critics contend that this maneuver could severely impede claimants’ chances of securing compensation, portraying it as a shield for corporate accountability.

While J&J has not filed for bankruptcy itself, the creation of LTL and subsequent bankruptcy filing has reignited debates over the misuse of bankruptcy laws to evade legal responsibility. Critics decry such maneuvers as a perversion of justice, calling for legislative measures to curb corporations’ exploitation of the bankruptcy system to shield assets and circumvent liabilities.

The company denied the claims according to a SEC post.

As the controversy intensifies, legal scholars, lawmakers, and consumer advocacy groups amplify calls for regulatory intervention to address what they perceive as an abuse of the bankruptcy process for corporate gain.