The biggest risk facing Johnson & Johnson (NYSE: JNJ) today is its exposure to talc-related lawsuits. The company has already spent billions on payouts and legal costs to address lawsuits from people who allege they developed cancer from the use of its baby powder products contaminated with asbestos. With 60,000 claimants still out there, this presents a huge cloud over the business.

The company developed a plan to address the issue and limit its liability by creating a subsidiary that would then file for bankruptcy protection. But the courts pushed back on that strategy, and that could pose a big problem for Johnson & Johnson.

In 2021, Johnson & Johnson created a subsidiary, LTL Management. The plan was to have the company assume control of the talc operations, including the parent company's talc liabilities. Then the business would file for bankruptcy protection. By doing so, Johnson & Johnson could significantly limit its exposure to talc lawsuits. 

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Source Fool.com