Federal judge tosses 3M earplug unit's bankruptcy filing
A federal judge on Friday dismissed the bankruptcy filing of 3M (NYSE:MMM) unit Aearo Technologies, agreeing with personal-injury lawyers who claimed the chapter 11 filing was in bad faith in trying to resolve 3M’s (MMM) legal liabilities and didn’t have a valid reason for reorganization.
3M (MMM) issued a statement saying it will consider appealing the ruling by Judge Jeffrey Graham of the U.S. Bankruptcy Court in Indianapolis.
"Aearo is assessing its options for appeal of this decision, and 3M and Aearo will continue to pursue appeals raising evidentiary and legal issues from previous multi-district litigation (MDL) bellwether trials," according to a statement. "3M (MMM) and Aearo are prepared to continue to defend the product in litigation."
Shares of 3M (MMM) slipped 1.7% to $99.09 by 2:10 p.m. ET.
3M (MMM) last July put Aearo in bankruptcy as part of its effort to reach a global settlement for about 230,000 lawsuits claiming its military earplugs were defective and damaged the hearing of veterans. 3M (MMM) denies the allegations.
CAEv2 earplug Source: 3M
Financially stable companies have sought to protect themselves from legal liabilities in multidistrict litigation by putting subsidiaries in bankruptcy. The legal maneuver is controversial, with critics calling it an abuse of bankruptcy law.
Veterans in February asked Graham of the U.S. Bankruptcy Court in Indianapolis to dismiss Aearo's chapter 11 filing a few days after a federal appeals court rejected a petition by Johnson & Johnson (JNJ), a financially solvent company, to place a newly created unit into bankruptcy to halt about 40,000 lawsuits claiming its talc products cause cancer.
A judge in April dismissed the case, and the Johnson & Johnson (JNJ) filed a second bankruptcy petition hours later.
Graham in August declined to extend Aearo's legal shield in bankruptcy court to 3M (MMM), which didn't seek chapter 11 protection. Aero appealed that ruling and is awaiting a verdict from the Seventh U.S. Circuit Court of Appeals, the Wall Street Journal reported.
More about 3M litigation
Source: Seeking Alpha
