UNITED STATES COURT OF APPEALS
                             FOR THE THIRD CIRCUIT



                    Nos. 22-2003, 22-2004, 22-2005, 22-2006, 22-2007,
                           22-2008, 22-2009, 22-2010, 22-2011



                             In Re: LTL MANAGEMENT LLC,
                                                  Debtor

                      OFFICIAL COMMITTEE OF TALC CLAIMANTS,
                                                 Appellant
                                        v.

    THOSE PARTIES LISTED ON APPENDIX A TO COMPLAINT AND JOHN AND JANE
                                DOES 1-1000

                    (District Court Civil No.: 21-bk-30589; 21-ap-03032)

              Present: RESTREPO, FUENTES, and AMBRO * Circuit Judges,

ORDER

         The Clerk is directed to file the amended precedential opinion contemporaneously

with this order. The changes to the opinion are shown in blue and red text on the pages

attached as Exhibit A to this order. As the opinion has not been revised in any material

way, no party may file a petition for rehearing.




*
    Judge Ambro assumed senior status on February 6, 2023.
                               BY THE COURT,



                                 s/ THOMAS L. AMBRO
                                     Circuit Judge

Dated: March 31, 2023
JK/cc: All Counsel of Record




                                 2
 Exhibit A

Revised Text
underlying basic and inferred facts require clear-error review,
the culminating determination of whether those facts support a
conclusion of good faith gets plenary review as “essentially[]
a conclusion of law.” Id.; see also U.S. Bank Nat’l Ass’n ex.
rel. CWCapital Asset Mgmt. LLC v. Vill. at Lakeridge, LLC,

 (2018). A conclusion of financial
distress, like the broader good-faith inquiry of which it is a part,
likewise is subject to mixed review. Whether financial distress
exists depends on the underlying basic facts, such as the
debtor’s ability to pay its current debts, and inferred facts, such
as projections of how much pending and future liabilities (like
litigation) could cost it in the future. But the ultimate
determination conclusion, like with good faith, is essentially a
conclusion of law that gets a fresh look. See 

                         B. Good Faith

        Chapter 11 bankruptcy petitions are “subject to
dismissal under 

(b) unless filed in good
faith.” BEPCO, 589 F.3d at 618 (citing NMSBPCSLDHB, L.P.
v. Integrated Telecom Express, Inc. (In re Integrated Telecom
Express, Inc.), 

 (3d Cir. 2004)). Section
1112(b) provides for dismissal for “cause.” A lack of good
faith constitutes “cause,” though it does not fall into one of the
examples of cause specifically listed in the statute. See In re
SGL Carbon Corp., 

 (3d Cir. 1999).
Because the Code’s text neither sets nor bars explicitly a good-
faith requirement, we have grounded it in the “equitable nature
of bankruptcy” and the “purposes underlying Chapter 11.” 

 (“A debtor who attempts to garner shelter under the
Bankruptcy Code . . . must act in conformity with the Code’s
underlying principles.”).




                                35
dismissal, of claims by assuming most, if not all, would go to
and succeed at trial. In doing so, these projections contradict
the record. And while the Bankruptcy Court questioned the
continuing relevance of the past track record after Ingham and
the breakdown of the Imerys settlement talks, this assumes too
much too early. Nothing in the record suggests Ingham—one
of 49 pre-bankruptcy trials and described even by J&J as
“unique” and “not representative,” App. 2692-93—was the
new norm. Nor is there anything that shows all hope of a
meaningful global or near-global settlement was lost after the
initial Imerys offer was rebuffed. The Imerys bankruptcy
remained a platform to negotiate settlement. And the
progression of the multidistrict litigation on a separate track
would continue to sharpen all interested parties’ views of
mutually beneficial settlement values.

        Finally, we cannot help noting that the casualness of the
calculations supporting the Court’s projections engenders
doubt as to whether they were factual findings at all, but instead
back-of-the-envelope forecasts of hypothetical worst-case
scenarios. Still, to the extent they were findings of fact, we
cannot say these were inferences permissibly drawn and
entitled to deference. See Universal Mins., 669 F.2d at 102.
Hence, they were clearly erroneous. And as we locate no other
inferences or support in the record to bear the Court’s assertion
that the “talc liabilities” “far exceed [LTL’s] capacity to satisfy
[them],” we cannot accept this conclusion either. 

(Mot. to Dismiss Op. 23).

16
   Because we arrive at the same result assuming the
Bankruptcy Court was correct to determine LTL was
responsible to indemnify J&J for all talc costs it incurs, we
need not opine on this conclusion. Still, we note certain




                                51
virtually all multidistrict ovarian cancer claims as well as
corresponding additional claims in the Imerys bankruptcy.
And as noted, we view all this against a pre-bankruptcy
backdrop where Old Consumer had success settling claims or
obtaining dismissal orders, and where, at trial, ovarian cancer
plaintiffs never won verdicts that withstood appeal outside of
Ingham and mesothelioma plaintiffs had odds of prevailing
that were less than stellar.

        From these facts—presented by J&J and LTL
themselves—we can infer only that LTL, at the time of its
filing, was highly solvent with access to cash to meet
comfortably its liabilities as they came due for the foreseeable
future. It looks correct to have implied, in a prior court filing,
that there was not “any imminent or even likely need of [it] to
invoke the Funding Agreement to its maximum amount or
anything close to it.” App. 3747 (LTL’s Obj. to Mots. for Cert.
of Direct Appeal 22) (emphasis added). Indeed, the Funding
Agreement itself recited that LTL, after the divisional merger
and assumption of that Agreement, held “assets having a value
at least equal to its liabilities and had financial capacity
sufficient to satisfy its obligations as they become due in the
ordinary course of business, including any [t]alc [r]elated
[l]iabilities.” App. 4313 (Funding Agreement 1, ¶ E)
(emphasis added). This all comports with the theme LTL
proclaimed in this case from day one: it can pay current and
future talc claimants in full. See App. 630 (Transcript of N.C.
“First Day” Hearing, October 20, 2021) (LTL’s counsel telling
the North Carolina bankruptcy court in his opening remarks
that “[LTL], New [Consumer], and J&J believe that $2 billion
exceeds any liability [LTL] could reasonably have for talc-
related claims . . . .” (emphasis added)).




                               53
accrue to the benefit of all, or nearly all, stakeholders. Thus
we need not lay down a rule that no nontraditional debtor could
ever satisfy the Code’s good-faith requirement.

       But here J&J’s belief that this bankruptcy creates the
best of all possible worlds for it and the talc claimants is not
enough, no matter how sincerely held. Nor is the Bankruptcy
Court’s commendable effort to resolve a more-than-thorny
problem. These cannot displace the rule that resort to Chapter
11 is appropriate only for entities facing financial distress.
This safeguard ensures that claimants’ pre-bankruptcy
remedies—here, the chance to prove to a jury of their peers
injuries claimed to be caused by a consumer product—are
disrupted only when necessary.

        Some may argue any divisional merger to excise the
liability and stigma of a product gone bad contradicts the
principles and purposes of the Bankruptcy Code. But even that
is a call that awaits another day and another case. For here the
debtor was in no financial distress when it sought Chapter 11
protection. To ignore a parent (and grandparent) safety net
shielding all liability then foreseen would allow tunnel vision
to create a legal blind spot. We will not do so.

       Because it abused its discretion in denying the motions
to dismiss, wWe thus reverse the Bankruptcy Court’s order
denying the motions to dismiss and remand this case with the
instruction to dismiss LTL’s Chapter 11 petition. Dismissing
its case annuls the litigation stay ordered by the Court and
makes moot the need to decide that issue.




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