The Third U.S. Circuit Court of Appeals has dismissed Johnson & Johnson’s attempt to use a bankruptcy filing to resolve lawsuits related to its talcum powder product.  J&J is facing billions of dollars in legal claims from customers who claim the healthcare company’s talcum powder caused cancer. The U.S. appeals court dismissed a bankruptcy filing by J&J subsidiary LTL management, preventing the firm from moving thousands of legal claims out of trial courts and into the bankruptcy system. J&J was employing a legal scheme referred to as the “Texas two-step” to split the company into two independent entities and place the one facing the talcum powder lawsuits into bankruptcy. J&J is facing more than 40,000 talcum powder cancer claims. J&J said its use of the bankruptcy system was not an attempt to reduce the size of payouts to cancer claimants. The company claims the move would lead to a more efficient and equitable resolution to the claims. J&J has agreed to fund its subsidiary LTL management’s talcum powder liabilities with up to $61B. The appeals court ruled that only companies facing financial stress could call on the bankruptcy system to help with restructuring.