Apropos of anything else, J&J's handling of this has been despicable. Creating an entity specifically to pick up all of the related liabilities, picking up those liabilities and then (exact count may be wrong, but it's very close) literally filing for bankruptcy within the space of three days.
The Texas two-step, as it's called.
> In 2021, the company spun off its liabilities into a new entity called LTL Management under a strategy called the “Texas two-step.” That legal but controversial approach allows a solvent parent company to protect its assets by creating a subsidiary to hold its liabilities — and then having the new company declare bankruptcy, as LTL did just days after incorporating. Critics complain it’s an abuse of the bankruptcy system and allows companies facing massive litigation to dodge corporate responsibility.
> The Third Circuit Court of Appeals in Philadelphia dismissed the bankruptcy filing in January, finding LTL was not in financial distress and had “no valid bankruptcy purpose.”
> But hours after that case was formally dismissed in April, LTL filed for bankruptcy protection again, this time with a higher settlement proposal of $8.9 billion.
The fact that this is legal is such a mockery of consumer protection law.
The Texas two-step, as it's called.
> In 2021, the company spun off its liabilities into a new entity called LTL Management under a strategy called the “Texas two-step.” That legal but controversial approach allows a solvent parent company to protect its assets by creating a subsidiary to hold its liabilities — and then having the new company declare bankruptcy, as LTL did just days after incorporating. Critics complain it’s an abuse of the bankruptcy system and allows companies facing massive litigation to dodge corporate responsibility.
> The Third Circuit Court of Appeals in Philadelphia dismissed the bankruptcy filing in January, finding LTL was not in financial distress and had “no valid bankruptcy purpose.”
> But hours after that case was formally dismissed in April, LTL filed for bankruptcy protection again, this time with a higher settlement proposal of $8.9 billion.
The fact that this is legal is such a mockery of consumer protection law.