Johnson & Johnson ’s use of bankruptcy to shift mass talc lawsuits against the company to chapter 11 will meet its most serious test yet before a federal appeals judge whose influential bankruptcy rulings shape one of the nation’s top corporate restructuring hubs.

Judge Thomas Ambro sits on the three-judge panel that will hear arguments Monday in a Philadelphia courtroom over an emerging corporate restructuring strategy where companies facing mass personal-injury litigation use a Texas law to create a new subsidiary with minimal business operations and make it responsible for tort liabilities before filing for bankruptcy.

This post first appeared on wsj.com

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