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A mineral production company that was formerly a major supplier of talc to the cosmetics industry has filed for Chapter 11 bankruptcy under the weight of over 500 lawsuits associated with its talcum powder. Minerals Technologies Inc.’s subsidiary, Barretts Minerals Inc., has voluntarily filed for Chapter 11 bankruptcy in the U.S. Bankruptcy Court for the Southern District of Texas.
Barretts Minerals Inc, which was originally owned by Pfizer until 1992 and supplied talc for products such as Gold Bond medicated body powder, no longer sells talc to the cosmetics industry but is still facing 550 personal injury lawsuits relating to its talc products, according to the Wall Street Journal.
During its time as a subsidiary of Pfizer, Barretts Minerals relied on its parent company to fund talc litigation. To address these liabilities, Barretts Minerals Inc. will voluntarily pursue Chapter 11 bankruptcy while operating its business normally. In order to maintain liquidity through this process, Barretts Minerals will receive a $30 million financing deal from JMB Capital Partners Lending LLC.
This loan may give Barretts Minerals and Minerals Technologies a stronger bankruptcy case than other talc manufacturers such as Johnson & Johnson, which has attempted to use the bankruptcy system to mitigate legal talc liabilities. Johnson & Johnson has had its bankruptcy case thrown out twice with the key argument being that Johnson & Johnson is not under sufficient financial duress to warrant the protections of the bankruptcy system.
In contrast, Barretts Minerals has expressed a need for additional financial support until it can access the proceeds of the bankruptcy sale. The sale is a voluntary liquidation of Barretts Minerals’ talc assets settled under section 363 of the Bankruptcy Code in order to fund the Chapter 11 case and any additional trusts that must be set up as a consequence of the bankruptcy proceeding.
Other than Barretts Minerals, no other subsidiary or unit of Minerals Technologies is filing for bankruptcy and will be operating as usual. In response to the Chapter 11 announcement, Board Chairman and CEO of Minerals Technologies Douglas Dietrich stated, "We continue to believe the lawsuits against BMI are meritless, and stand by the safety of BMI's talc products, which have always been tested to the highest standard." Dietrich also stated that the company had considered a number of alternatives to bankruptcy but is “confident” that Chapter 11 bankruptcy will provide the best outcome to all parties, including talc plaintiffs.
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