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Military members seek dismissal of 3M subsidiary’s bankruptcy

Reuters

Current and former U.S. military members suing 3M over allegedly defective military earplugs have asked a U.S. judge to dismiss 3M subsidiary Aearo Technologies’ bankruptcy, accusing the company of using bankruptcy to shield itself from litigation.

The servicemembers’ group said late Thursday Aearo’s Chapter 11 bankruptcy should face the same fate as the bankruptcy of a Johnson & Johnson-created subsidiary that was used to settle lawsuits alleging J&J baby powder and other talc products caused cancer. A federal appeals court dismissed the bankruptcy strategy this week.

3M faces more than 230,000 lawsuits accusing it of selling defective earplugs that caused hearing loss for U.S. military members. The company has sought to settle those lawsuits through Aearo’s bankruptcy.

3M’s plan faltered when U.S. Bankruptcy Judge Jeffrey Graham in Indianapolis ruled that Aearo’s bankruptcy did not stop earplug lawsuits from proceeding against 3M, which is not bankrupt. 3M is appealing that ruling.

Now the servicemembers suing want Graham to go a step further and end Aearo’s bankruptcy entirely. In a Thursday court filing, they cited a Monday ruling by the U.S. 3rd Circuit Court of Appeals in Philadelphia dismissing a bankruptcy case filed by J&J subsidiary LTL Management because neither J&J nor LTL were in “financial distress.”

LTL, like Aearo, entered bankruptcy with an agreement that its nonbankrupt parent would fund a settlement of the lawsuits in bankruptcy.

Those funding agreements undercut plaintiffs’ arguments that 3M and J&J were “hiding assets” from potential creditors, but they also undercut the companies’ arguments that they could not afford to fight the lawsuits outside of bankruptcy court.

The committee representing the servicemembers in bankruptcy court said in Thursday’s filing that the LTL decision “knocks the props out from under these cases and requires their dismissal.”

3M said Friday it would oppose efforts to dismiss the bankruptcy. It has denied liability, saying its earplugs offered protection to soldiers while allowing them to hear on the battlefield.

BUSINESS

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2023-02-04T08:00:00.0000000Z

2023-02-04T08:00:00.0000000Z

https://daily.gazette.com/article/281822877949059

The Gazette, Colorado Springs