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Ex-J&J talc supplier considering new path as judge nixes bankruptcy plan votes

A bottle of Johnson and Johnson Baby Powder is seen in a photo illustration taken in New York, February 24, 2016. REUTERS/Mike Segar

  • Group of personal injury claims deemed questionable by judge
  • Without votes, Imerys Talc must renew restructuring talks

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(Reuters) – The judge overseeing Imerys Talc America Inc’s bankruptcy on Wednesday eliminated more than 15,000 personal injury claimants’ votes on the former Johnson & Johnson talc supplier’s proposed Chapter 11 plan, forcing the company to revisit its restructuring strategy.

U.S. Bankruptcy Judge Laurie Selber Silverstein issued a 36-page decision on J&J’s request to block changes to thousands of votes on the plan. Imerys filed for bankruptcy in 2019 to address widespread litigation alleging its talc caused mesothelioma and ovarian cancer and is pursuing a plan to compensate victims.

With the ruling from Silverstein, Imerys does not have the votes it needs to secure a part of the plan that essentially requires personal injury claims in a bankruptcy to be handled exclusively through a trust and block claimants from suing insurance carriers and other related parties in the future. The provision is a key aspect of the plan.

Imerys said in a statement on Wednesday that it is evaluating next steps.

“While we are disappointed by the court’s ruling, we remain committed to resolving our historic talc-related liabilities in a just manner for all involved parties,” the company said.

Imerys will likely try to work with J&J, insurers and other opponents of the deal on an amended plan.

J&J, which has also faced extensive litigation over its talc products and has denied wrongdoing, argues that Imerys is trying to make it easier for cancer victims to sue J&J instead. J&J did not immediately respond to a request for comment.

In Wednesday’s decision, Silverstein rejected a request by a law firm that represents personal injury claimants to change its 15,719 votes against the plan to accept the plan. However, she also refused to let the “no” votes stand, saying she would consider them withdrawn.

She took issue with the method in which the firm, Bevan & Associates, collected and submitted the votes in the first place, which was done without consulting individual claimants. Attorney Thomas Bevan testified at a hearing in September that he submitted a master ballot on behalf of all of his clients and believed they had all “likely” been exposed to the company’s talc products.

Silverstein said it’s not clear the Bevan clients even have valid claims against Imerys because the firm did not conduct due diligence on whether they’d been exposed to the company’s talc.

“In other words, Bevan & Associates simply printed out a list of its clients in excel spreadsheet format and slapped it behind a Master Ballot,” the judge wrote.

Bevan called the judge’s statements “interesting” and said he would satisfy the judge’s concerns with respect to future votes in the Imerys case.

Imerys, once the U.S.-based arm of French group Imerys SA, was sold to Magris Resources Canada Inc for $223 million in 2020. Those proceeds will go to the trust that, under the company’s proposed plan, will pay personal injury claims.

J&J in recent months has explored a plan to offload liabilities from widespread talc-related litigation into a new business that would then be placed in bankruptcy, as reported by Reuters.

The case is In re Imerys Talc America Inc., U.S. Bankruptcy Court, District of Delaware, No. 19-10289.

For Imerys: Jeffrey Bjork, Kimberly Posin, Helena Tseregounis and Richard Levy of Latham & Watkins; and Mark Collins, Michael Merchant, Amanda Steele and Brett Haywood of Richards, Layton & Finger

For Johnson & Johnson: Diane Sullivan, Gary Holtzer, Ronit Berkovich and Ted Tsekerides of Weil, Gotshal & Manges; and Patrick Jackson of Faegre Drinker Biddle & Reath

Read more:

Judge mulls Johnson & Johnson bid to block vote changes in ex-talc supplier bankruptcy

EXCLUSIVE – J&J exploring putting talc liabilities into bankruptcy

Maria Chutchian

Maria Chutchian reports on corporate bankruptcies and restructurings. She can be reached at maria.chutchian@thomsonreuters.com.

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