From Purdue Pharma To J&J: How Bankruptcy Can Protect From Lawsuits

Companies can dodge legal consequences using a bankruptcy process, but critics ask if this just relieves them of accountability.

Large companies like Purdue Pharma, Johnson & Johnson and 3M have been embroiled in high-profile lawsuits, and their responses have become the subject of controversy — namely, when companies declare bankruptcy in the face of major civil lawsuits. 

While these companies sometimes argue that declaring bankruptcy makes things more efficient for getting payouts to plaintiffs, critics of the practice say the process is being used to skirt accountability and halt legal action.

When a business in debt files for Chapter 11 bankruptcy, it allows the company to reorganize itself. The company sells some or all of its assets in order to stay afloat.