Daily SumUp

Johnson & Johnson (JNJ.N), opens new tab has cleared a key threshold of support for its proposed $6.5-billion settlement of tens of thousands of lawsuits alleging its baby powder and other talc products caused cancer, according to a Bloomberg report.

More than 75% of claimants voted in favor of the proposal, according to Bloomberg, a hurdle J&J set for a third attempt at placing a subsidiary in bankruptcy protection to resolve the litigation.

Reuters has not independently verified the report, for which Bloomberg cited sources familiar with the negotiations. Sources who spoke with Reuters said the votes are still being tallied.

J&J spokesperson Clare Boyle said the company could not comment as the vote tally was not final. The company has previously expressed confidence that its settlement proposal would ultimately win enough support from plaintiffs to proceed.

J&J faces lawsuits from about 61,000 claimants who alleged that its baby powder and other talc products were contaminated with asbestos and caused ovarian and other cancers. J&J denies the allegations and has said that its products are safe.

The company set the 75% vote percentage, matching a provision in U.S. bankruptcy law, as the benchmark to proceed with another bankruptcy bid, which now is expected in the near future. The deadline for casting votes was July 26.

After being rebuffed twice by federal courts, the healthcare giant is attempting again to end the litigation in a so-called “Texas two-step” bankruptcy.

The "two-step" maneuver involves offloading its talc liability onto a newly created subsidiary, which then declares Chapter 11. The goal is to use the proceeding to force all plaintiffs into one settlement – without requiring J&J itself to file bankruptcy.

But the company needs the votes of 75% of claimants before the subsidiary can ask a bankruptcy judge to impose the deal on all of them.