## Facts

- Johnson & Johnson Consumer, Inc. (Old Consumer), a subsidiary of Johnson & Johnson (J&J), and J&J faced more than 38,000 claims alleging that certain talc products caused cancer; many claims were pending in a federal multidistrict litigation (MDL) proceeding in New Jersey.
- Related disputes were already concentrated in or near New Jersey, including insurer actions in New Jersey state court concerning coverage obligations.
- Additional talc-related proceedings were pending elsewhere, including adversary proceedings filed by talc companies against Old Consumer and J&J in the Delaware bankruptcy court.
- Old Consumer implemented a Texas divisional-merger transaction and was dissolved, resulting in the creation of LTL Management, LLC (LTL) and another entity.
- LTL was formed as a Texas limited-liability company and then converted to a North Carolina LLC shortly before filing bankruptcy.
- LTL’s operations were tied to New Jersey: it operated from New Jersey, used a New Jersey mailing address, and relied on employees seconded from another New Jersey-based J&J subsidiary that also provided administrative services.
- LTL conducted no business in North Carolina beyond its recent organizational steps and bankruptcy filing.
- Two days after LTL was formed, it filed a Chapter 11 petition in the U.S. Bankruptcy Court for the Western District of North Carolina.
- The Bankruptcy Administrator moved to transfer venue to the District of New Jersey. The Official Committee of Talc Claimants and certain other parties supported transfer. LTL opposed transfer and sought to keep the case in North Carolina.

## Issues

1. Whether the bankruptcy case should be transferred from the Western District of North Carolina to the District of New Jersey under 28 U.S.C. § 1412 “in the interest of justice” or “for the convenience of the parties.”
2. Whether LTL’s recent conversion to a North Carolina LLC and lack of business activity in North Carolina weighed in favor of transfer despite LTL’s venue choice.

## Decision

- The court granted the Bankruptcy Administrator’s motion to transfer venue.
- The court ordered the Chapter 11 case transferred to the U.S. Bankruptcy Court for the District of New Jersey.

## Legal Principles

- Under 28 U.S.C. § 1412, a bankruptcy court may transfer a case to another district if transfer is warranted either (a) in the interest of justice or (b) for the convenience of the parties.
- In evaluating transfer, courts consider practical case-administration considerations, including where the debtor actually operates, where management and employees are located, where major creditor groups and claimants are situated, and where related litigation is pending.
- A debtor’s recent formation or conversion in a district, without meaningful business activity there, may reduce the weight given to the debtor’s choice of forum when other connections point strongly to another district.
- Concentration of major related proceedings (such as an MDL and insurance coverage litigation) in a different district can favor transfer to improve coordination and reduce duplication and travel burdens.

## Conclusion

In this venue decision, the bankruptcy court transferred LTL Management’s newly filed talc-related Chapter 11 case from the Western District of North Carolina to the District of New Jersey, concluding that LTL’s real operational ties and the center of related talc litigation and stakeholders were in New Jersey and that transfer was warranted under 28 U.S.C. § 1412 based on case administration and party convenience considerations.


In re LTL Management, LLC, 2021 Bankr. LEXIS 3155 (2021)