Johnson & Johnson's Talc Subsidiary Filed for Bankruptcy Three Times. Johnson & Johnson Never Did.

On October 18, 2019, Johnson & Johnson recalled 33,000 bottles of its baby powder after an FDA-contracted lab found trace chrysotile asbestos in a single bottle bought online. J&J ran 155 of its own tests across two outside labs and found nothing, and said the FDA's result was most likely contamination or analyst error. Two months later, the company said the same thing about the whole controversy: no asbestos, no cancer link, nothing to see. A Reuters investigation published a year earlier had already found decades of internal company documents saying otherwise.

By the time a Texas bankruptcy judge threw out J&J's third attempt to make the talc lawsuits go away in March 2025, the company had spent seven years insisting its baby powder was safe while trying, three separate times, to resolve the claims against it through a bankruptcy filed by a subsidiary that had never sold a bottle of powder in its life.

What Reuters Found

Reuters' December 2018 investigation, based on internal J&J memos, reports, depositions, and other confidential documents largely produced in litigation, found that from at least 1971 until the early 2000s, the company's raw talc and finished powders sometimes tested positive for small amounts of asbestos. Executives, mine managers, scientists, doctors, and lawyers inside the company discussed the test results and how to respond to them without disclosing the findings to regulators or the public, according to the documents Reuters reviewed.

The same documents, per Reuters' reporting, showed J&J lobbying regulators against tightening asbestos limits in cosmetic talc and working to shape or suppress outside scientific research on talc's health effects. J&J disputed Reuters' characterization of the documents and maintained its talc was safe. The stock dropped about 10 percent the day the story ran.

The Lawsuits, By the Numbers

• 1971–early 2000s: the period Reuters' reviewed documents cover, during which J&J's raw talc and finished powder products intermittently tested positive for asbestos in the company's own and outside labs.
• October 18, 2019: J&J recalls 33,000 bottles of baby powder (lot #22318RB) after an FDA-contracted lab reports chrysotile asbestos in a bottle bought on Amazon.
• May 19, 2020: J&J discontinues talc-based Johnson's Baby Powder in the U.S. and Canada, citing a pandemic-driven portfolio review and "consumer habits" — while noting it was already facing more than 16,000 talc lawsuits.
• 2023: J&J discontinues talc-based baby powder globally, shifting entirely to a cornstarch formula worldwide.
• By 2024, the number of plaintiffs alleging talc-related ovarian cancer or mesothelioma had grown to roughly 61,000–90,000, depending on the count and filing, across state and federal courts.

The Two-Step

In October 2021, J&J executed a maneuver under a Texas divisional-merger statute that lets a company split itself into two new entities without either one going through a conventional merger or asset sale. One new entity, later named LTL Management, received the talc liabilities and a "funding agreement" backing from J&J's real operating businesses. The other kept essentially all of the productive assets — the consumer, pharmaceutical, and medical-device businesses that make J&J money. LTL then filed for Chapter 11 bankruptcy in New Jersey the same day it was created.

The mechanical effect was to freeze roughly 38,000 pending talc lawsuits under bankruptcy's automatic stay, moving the claims out of jury trials and into a bankruptcy court where they would be resolved collectively, for whatever amount the court approved — while J&J itself, worth several hundred billion dollars, never filed for bankruptcy at all. Plaintiffs' lawyers and multiple courts came to call this the "Texas Two-Step": create a subsidiary, hand it the liabilities and none of the assets, and let it go bankrupt on the company's behalf.

Three Strikes

• January 30, 2023: the Third Circuit Court of Appeals dismisses LTL's first bankruptcy filing, ruling it was not filed in good faith because LTL — backstopped by a J&J funding agreement worth up to $61.5 billion — was not actually in financial distress, the threshold Chapter 11 requires.
• Hours after that dismissal, LTL files a second Chapter 11 petition, this time arguing it faces genuine distress because J&J had scaled back the funding commitment and recent jury verdicts against the company were mounting.
• July 2024: the Third Circuit again dismisses the case on the same good-faith grounds, again finding LTL was not the financially distressed debtor bankruptcy law is meant for.
• September 2024: J&J creates a third new entity, Red River Talc LLC, and routes an approximately $8–9 billion, 25-year settlement offer through it into a fresh Chapter 11 filing, this time claiming roughly 83 percent creditor support for a pre-packaged plan.
• March 31, 2025: after a two-week trial, a federal bankruptcy judge in Houston rejects the third attempt, citing irregularities in how claimant votes for the settlement were solicited and counted.

Back to the Jury

After the third dismissal, J&J said it would not appeal and would instead return to litigating the remaining talc claims individually in the tort system it had spent three and a half years trying to route around. The company has continued to contest the underlying science in court, and results in individual trials have gone both ways — J&J has won defense verdicts in some cases and lost large plaintiff verdicts, including several exceeding $100 million, in others. Whether talc exposure causes ovarian cancer or mesothelioma remains scientifically contested outside the litigation itself; the FDA has not required a cancer warning label on talc products, while other reviews and some plaintiffs' experts have concluded otherwise. J&J maintains its talc was always asbestos-free and safe.

Three bankruptcy filings, three dismissals, and one company that spent the years in between telling regulators its product had never contained asbestos while telling a bankruptcy court, under oath, that the liability from that same product was severe enough to justify freezing tens of thousands of lawsuits filed by people who say it gave them cancer.

Filed from public reporting:

• Reuters — Johnson & Johnson Knew for Decades That Asbestos Lurked in Its Baby Powder
• CNBC — J&J Shares Plunge 10% After Report That the Company Knew for Decades About Asbestos in Baby Powder
• U.S. Food and Drug Administration — Baby Powder Manufacturer Voluntarily Recalls Product for Asbestos
• CNBC — Johnson & Johnson Confirms No Asbestos in Johnson's Baby Powder
• Johnson & Johnson — Announcement of Discontinuation of Talc-Based Baby Powder in U.S. and Canada
• CNBC — Johnson & Johnson Discontinues Talc-Based Baby Powder in US and Canada
• American Bar Association — Put Down Your Fiddle: Third Circuit Halts Johnson & Johnson's Texas Two-Step Bankruptcy Tactic
• Dentons — Third Circuit Dismisses LTL Mass Tort Chapter 11 Cases, Rejecting Johnson & Johnson's "Texas Two-Step" Bankruptcy Strategy
• Congressional Research Service (Congress.gov) — Third Circuit Dismisses Johnson & Johnson Bankruptcy and Novel Mass-Tort Approach
• ABA Journal — Judge Reluctantly Tosses Second Texas Two-Step Bankruptcy Attempt by Baby Powder Maker J&J
• Marketplace — Johnson & Johnson Tried 3 Times to Resolve Talc Suits in Bankruptcy Court. It Didn't Work.
• Asbestos.com — Major Retailers Pull J&J Baby Powder After FDA Finds Asbestos