Talc and asbestos-related liabilities have forced several cosmetics, beauty and bath products companies, such as iconic Vi-Jon Laboratories, to seek Chapter 11 bankruptcy protection against huge litigation expenses.
118-year-old dry bath products manufacturer Vi-Jon Laboratories Inc., which manufactures its hand sanitizer Germ-X and Swan Epsom Salt brands, filed for Chapter 11 bankruptcy, seeking to reorganize and resolve alleged talc-related asbestos claims through a global settlement in its restructuring support agreement.
The St. Louis-based bath products maker, which makes Epsom salts and body powder for retail sales, filed its petition in the U.S. Bankruptcy Court for the District of Delaware on Aug. 2, listing $1 million to $10 million in assets and $500 million to $1 billion in debts, according to court papers.
Talc-related litigation forces bankruptcy
The debtor’s outstanding unsecured debts include $20 million in talc-related litigation judgments, $15 million in certain retailer indemnification claims, and $2 million in other unsecured debts.
Vi-Jon does not have any secured debt and doesn’t plan to seek postpetition financing. The debtor intends to fund its operations and the Chapter 11 case through a combination of cash on hand, cash receipts, and equity funding from its affiliates.
Vi-Jon’s non-debtor parent company Emprise Group Inc. did not file for Chapter 11 bankruptcy.
A spokesperson for Vi-Jon was not immediately available for comment on Aug. 4.
The debtor hired NERA Economic Consulting to prepare liability forecasts for the debtor’s exposure to talc-related litigation based on two periods. Filing trends for mesothelioma claims between January 2022 and May 2023 estimated litigation costs at $102 million with a net present value of $14 million.
Claims against the debtor since 2017 estimated litigation costs at $59 million and a $9 million present value. Emprise agreed in 2023, as part of a restructuring transaction, to provide $25 million in funding to Vi-Jon.
Company makes private-label products
The debtor in the 1960s became a producer of private-label bath products for retailers, such as F.W. Woolworth, and evolved into a major manufacturer of private label body powders and Epsom salts for retailers such as Walgreens, Kroger, Dollar General, and Amazon, according to a bankruptcy declaration by Vi-Jon Chief Restructuring Officer Mackenzie Shea, a managing director at Berkeley Research Group.
The debtor’s largest unsecured creditors include talc personal injury law firms, including The Gori Law Firm, SMMW Law LLC, Meirowitz & Wasserberg LLP, and Maurie Raichie Hartley French & Mudd LLC. The petition did not list the unliquidated unsecured claims amounts of the law firms.
Debtor says its products are safe
Vi-Jon vigorously disputed all talc-related liabilities and maintains that its products were safe, according to the court declaration. Cancer claims against the company related to talc are without medical or scientific merit, the debtor claimed in court papers, and exposure to the debtor’s talc products had not caused any personal injuries.
The debtor alleged that it received certificates of analysis from raw talc suppliers for each batch of talc purchased at the time when the debtor manufactured and sold talc products. It said that certificates indicated no asbestos was detected in any of the talc purchased by Vi-Jon.
Discontinued talc sales in 2016
Vi-Jon manufactured talc-related products from 1963 until permanently discontinued products and sale of the products in 2016. The debtor temporarily discontinued the sale of talc from 1995 through August 1999, according to court papers.
Vi-Jon began operations as Peroxide Specialty Company in 1908 and rebranded as Vi-Jon Laboratories Inc. in 1933, developing a successful line of cosmetics. Berkshire Partners LLC obtained controlling interest in the company in 2006, and the company merged with Tennessee private brand manufacturer Cumberland Swan Holdings in July 2006, becoming Vi-Jon Inc.
Berkshire sold the company in 2020 to the Vi-Jon Employee Stock Ownership Plan, and it became 100% employee-owned Vi-Jon Holding Inc. The debtor Vi-Jon LLC is a subsidiary of the parent company. Vi-Jon Holding was renamed Emprise Group Inc. in 2023.
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