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June 25, 2019 – The Court hearing the Imerys Talc America case has extended the periods during which the Debtors have an exclusive right to file a Chapter 11 Plan, and solicit acceptances thereof, through and including September 11, 2019 and November 12, 2019, respectively [Docket No. 744]. Absent the requested relief, the Plan filing date expired on June 13, 2019 and solicitation date is scheduled to expire on August 12, 2019. Although neither the exclusivity motion or order directly reference Johnson & Johnson by name, as discussed below, they are central to the Debtors' decision to file for Chapter 11 and to eventual creditor recoveries [and to the granting of this extension].
As previously cited from the Debtors’ requesting motion [Docket No. 691], “The Chapter 11 Cases present complex issues of bankruptcy law, particularly in the context of mass tort trusts, and also require the participation of certain key parties, including both a committee representing the interests of present talc claimants and a future claimants representative (the ‘FCR’). To that end, the Debtors engaged a proposed FCR on a prepetition basis, pending a formal appointment in a bankruptcy proceeding, and initiated a months-long prepetition diligence and negotiation process. The FCR was recently appointed by this Court on June 3, 2019 [Docket No. 647] following an evidentiary hearing and extensive litigation involving the U.S. Trustee and certain insurance parties. The TCC [the Official Committee of Tort Claimants] was appointed on March 5, 2019 and the retention of the TCC’s legal counsel was approved by the Bankruptcy Court on May 21, 2019.
The Debtors have also been managing litigation and negotiations with other third parties. In particular, the Debtors have initiated, and are currently litigating, an adversary proceeding with a former predecessor, Cyprus Mines Corporation, and Cyprus Amax Minerals Company relating to the rights to proceeds under certain historical insurance policies, which the Debtors maintain are property of the estates (the ‘Adversary Proceeding’). A trial date in the Adversary Proceeding is currently set for early August. The Debtors have devoted significant time and effort to their Chapter 11 Cases, however the cases remain at a relatively early stage. The FCR has conducted a significant prepetition diligence process, and the Debtors are now sharing diligence materials with the TCC and have begun preliminary discussions with both the TCC and the FCR regarding a chapter 11 plan. The Debtors have also had in person meetings with certain other parties in interest that are expected to play a key role in the formulation of the consensual plan and trust. The Debtors plan to continue working diligently and efficiently toward a consensual chapter 11 plan building upon this initial progress.”
One or more of the Debtors also have certain indemnity rights against J&J or one of its affiliates for OC Claims and Mesothelioma Claims. For example, under a 1989 stock purchase agreement pursuant to which the Debtors purchased the entity known today as ITV, J&J agreed to indemnify one or more of the Debtors for all liabilities arising out of use or exposure to talc-containing products supplied to J&J prior to the January 6, 1989 closing date. In addition, under various talc supply agreements, J&J agreed to indemnify one or more of the Debtors for all liabilities arising out of the supply of talc to J&J during the term of the supply agreements. While the Debtors have additional protection from the Talc Claims through these indemnification agreements with J&J and its affiliates, the Debtors’ ability to recover under these indemnification agreements in a timely fashion is uncertain. As of the Petition Date, J&J has refused to acknowledge or accept its indemnification obligations and has disputed the scope of coverage available to the Debtors under these agreements (or denied indemnification altogether). As such, the Debtors’ recovery under these indemnification agreements has been significantly delayed."
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