Before we get too outraged, consider:
J/J has 38,000 lawsuits pending.
If each one resulted in a $1M verdict, that's $38B dollars, not including any costs of trial; and that is a very modest figure, the verdicts could easily be several multiples of that
J/J has total assets of $182B (using the $400B market value of J/J is bullshit), but only less than $60B is cash equivalent, and another $81B is "intangibles" and "goodwill," which means difficult or impossible to turn into cash, so maybe about $100B potentially available to creditors
Each lawsuit was filed at a different time, in many different courts, and each one will reach a final judgment at a different time
So, you have total assets, even if you liquidate the whole company, that are unlikely or barely able to compensate all of the claimants. And you have a massive first-come, first-served problem where you have a "bank run" on the assets of the company and a goodly number of people may be left holding the bag.
Bankruptcies "stay" lawsuits for exactly this reason. Even if you think a company should be liquidated out of existence, there's a fairness problem for the injured claimants. Many economic types would argue that a company shouldn't likely be liquidated. This is nothing new and nothing grotesquely unfair in many cases, especially when you consider that a state court jury may give a massive award that is never collected because of the bank run.
Bankruptcy for a company facing massive liability from a large number of claimants have been filing bankruptcy for decades, it's not new, it's part of the theory underlying bankruptcy. So the focus of that article on "halting" lawsuits is kind of hysterical. Bankruptcy imposes some order on the chaos of 40,000 lawsuits, and other debts.
But, there's an added thing here, and that is the formation of a subsidiary corporation to which all of the liability is assigned (I'm not sure what the "quirk in Texas law" is), but I think this kind of shit happens pretty frequently in a lot of jurisdictions. That way, only the subsidiary files bankruptcy and the parent is not "endangered" by it. That seems a little extra gamey.
But, in the end, as part of the bankruptcy, J/J is going to have to put together a pretty massive fund to pay out to the claimants. The question becomes would that be a better deal for the claimants than suing J/J out of existence. And then there's the question whether the world is better off with or without a J/J, which employes 141,000 people worldwide.
I'm not defending Johnson and Johnson here. I'm just providing some perspective that is lacking in the article.
@Chad Fuck is probably the authority round here on the intersection of mass torts and bankruptcy. Although I think Thuj cut his teeth on asbestos lawsuits. And, asbestos is kind of the ancient paradigm for bankruptcy and creating a fund to settle claims. Johns-Manville filed bankruptcy in 1981 because of asbestos suits, and litigation continues to this very day. https://mantrust.claimsres.com/