JNJ Johnson and Johnson

By Katy Stech Ferek and Sara Randazzo 

Imerys Talc America Inc. has filed for bankruptcy protection as it faces accusations that the talc it supplied for Johnson & Johnson's baby powder causes cancer.

The company filed for chapter 11 protection Wednesday after spending tens of millions of dollars to defend itself against lawsuits alleging its talcum powder causes ovarian cancer and mesothelioma. The talc supplier faces claims from more than 14,600 people, a number that has grown dramatically in recent years in the wake of large verdicts against Imerys and baby powder maker Johnson & Johnson.

The two companies contend talc doesn't cause cancer or contain asbestos and have succeeded in getting some verdicts overturned on appeal.

The Imerys filing in U.S. Bankruptcy Court in Wilmington, Del., immediately suspends all talc-related litigation against the U.S.-based mining company and will enable Imerys officials to negotiate payouts with those who have sued them.

Imerys Talc America and another affiliate that filed for bankruptcy employ more than 200 people at a Texas processing plant and at mining operations in Montana and Vermont. The companies are owned indirectly by French minerals company Imerys SA, which bought the U.S. entities in 2011 when they were facing only a handful of talc-related lawsuits.

Imerys Talc America President Giorgio La Motta said in a press release that bankruptcy "is the best course of action to address our historic talc-related liabilities and position the filing companies for continued growth."

Documents made public through the litigation have shown efforts that Imerys predecessor Luzenac America allegedly took to keep talc from being listed as potentially carcinogenic by regulatory authorities.

The company by 2006 became less involved in attempts to prove talcum powder's safety, according to court-filed documents. After a World Health Organization branch that year listed perineal use of talcum powder as possibly carcinogenic, a Luzenac executive said they were no longer interested in funding ovarian cancer research because the "horse has already left the barn," according to an email shown to jurors by plaintiffs lawyers.

In response to the release of those documents, Imerys has denied wrongdoing.

Imerys also put its Canadian operations into bankruptcy. The Imerys companies that filed for bankruptcy recorded $174 million in revenue last year. Their operations will not be affected by the filings, company officials said.

Bankruptcy rules give troubled organizations the chance to pool money for victims from their assets, including insurance coverage, and set deadlines for claimants to come forward -- a process overseen by a federal judge. Imerys officials also may set aside a pool of money for those who have not yet become ill but could later sue over health problems.

U.S. bankruptcy law doesn't require companies to be insolvent to seek court protection. For decades, major corporations facing massive litigation liabilities have turned to bankruptcy to defend themselves from lawsuits -- including those with claims from asbestos-related illnesses -- that threaten to overwhelm their businesses.

In 1982, Johns-Manville Corp. became the first manufacturer to file for bankruptcy to deal with asbestos lawsuits. Dozens of manufacturers have followed their lead, using the process to form trusts for people with asbestos-related health problems.

Write to Katy Stech Ferek at katherine.stech@wsj.com and Sara Randazzo at sara.randazzo@wsj.com

(END) Dow Jones Newswires

February 13, 2019 13:23 ET (18:23 GMT)

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