While federal trial and appellate courts took recent steps to curb abuses of the bankruptcy system by non-distressed corporations, parties and courts must remain vigilant to prevent attempts to use bankruptcy as a means of side-stepping the civil justice system.

On Dec. 10, 2021, members of the United States House and Senate sent a letter to Johnson & Johnson’s incoming CEO, Joaquin Duato, to raise a seemingly obvious observation regarding Johnson & Johnson’s attempted use of the bankruptcy system to resolve the ongoing civil litigation over its talcum-powder products. “Chapter 11 bankruptcies are often sought by struggling businesses as a last resort,” wrote the senators and representatives, continuing: ”Johnson & Johnson is not, however, financially strained. Your company’s projected sales for this year exceed $90 billion and corporate executives have made numerous statements about the company’s financial strength.” If Johnson & Johnson was doing so well as a company, what was it doing before the bankruptcy court? wondered our elected officials.

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