On November 14, 2024, the U.S. Department of Justice, through the U.S. Trustee, raised objections to Johnson & Johnson’s choice of Jones Day as counsel for its subsidiary, Red River Talc LLC, in its bankruptcy case. The objection was based on a potential conflict of interest, as Jones Day was instrumental in developing the controversial “Texas Two-Step” strategy, which allows companies to create a subsidiary burdened with liabilities and file for bankruptcy, protecting the parent company’s assets from mass tort claims. This development raises questions about future regulatory oversight, especially with the potential shift in focus under a new administration, which might deprioritize aggressive intervention in corporate restructuring cases like this one.
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