By Dietrich Knauth

(Reuters) – A Johnson & Johnson subsidiary on Monday will urge a judge to allow it to use the bankruptcy process to resolve tens of thousands of claims that the company’s baby powder and other talc-based products caused cancer.

Mehr than 38,000 plaintiffs claim that the company’s products cause ovarian cancer, mesothelioma (a fatal form of asbestos exposure), and more. J&J (NYSE:) maintains that its consumer talc products are safe and confirmed through thousands of tests to be asbestos-free.

LTL Management LLC was created by the company. It filed for North Carolina bankruptcy protection.

J&J used a legal maneuver known as the “Texas two-step,” which allows companies to split in two through a so-called “divisive merger,” with one part of the company keeping valuable assets while the other is saddled with liabilities.

New Jersey’s U.S. Bankruptcy Judge Michael Kaplan has set a trial of five days to hear a proposal by the committees representing plaintiffs for dismissal.

Plaintiffs claim that the LTL bankruptcy proceeding would limit the amount of compensation that may be made available to people who were harmed.

The bankruptcy proceeding “makes dying cancer victims, even those with a judgment, scratch, claw, and fight, potentially for years, to be compensated from funds that would have been available” before LTL was split off, the plaintiffs’ lawyers wrote in December court papers.

LTL argued in court filings against the assertion that bankruptcy is legal and an appropriate response to an unpredictable wave of lawsuits.

J&J has proposed giving the subsidiary $2 billion to put into a trust to compensate the 38,000 current plaintiffs and future claimaints. LTL may also be able to tap into royalty revenues of greater than $350 million, according to the company’s public statements and court filings.

LTL said in December court papers that “there has not been any attempt in this case [to’slough away’ liability.” “The goal of this case” is to achieve an equitable, efficient, consensual settlement.

Before J&J split off LTL, it faced $3.5 billion in verdicts and settlements, including one in which 22 women were awarded a judgment of more than $2 billion, according to bankruptcy-court records.

The talc lawsuits have been temporarily halted while J&J, which has a market value exceeding $446 billion, awaits the outcome of the LTL bankruptcy proceedings.

Kaplan stated that he will decide before the end the month whether to discharge the bankruptcy case.

On Feb. 4, Reuters reported https://www.reuters.com/business/healthcare-pharmaceuticals/inside-jjs-secret-plan-cap-litigation-payouts-cancer-victims-2022-02-04 that J&J secretly launched “Project Plato” last year to shift liability from about 38,000 pending talc lawsuits to a newly created subsidiary, which was then to be put into bankruptcy.

A 2018 Reuters investigation found that J&J knew for decades that trace amounts of asbestos lurked in its Johnson’s baby powder and other cosmetic talc products.

In May 2020, the company decided to stop selling baby powder in Canada and the United States. This was partly due to “misinformation and unfounded claims” regarding the product’s talc-based ingredients.