Taking a Gamble: Bayer Mulls Bankruptcy for Monsanto to Dodge Glyphosate Lawsuits' Burden
Bayer may file bankruptcy for Monsanto as a strategic move to mitigate liabilities associated with glyphosate lawsuits.
Bayer, a German pharmaceutical and life sciences company, is pondering over a reckless yet strategic move: sending their U.S. entity, Monsanto, into bankruptcy. The motivation? Escaping the $12.9 billion reserve set aside for glyphosate lawsuits, a toxic herbicide linked to cancer.
The Wall Street Journal broke the news, stating sources familiar with the matter hinted at the move as a last-ditch effort if a proposed settlement with thousands of glyphosate victims fails.
Monsanto's selling point in the U.S. has long been the active ingredient in their popular product, Roundup, aka glyphosate. However, glyphosate is under fire for allegedly causing cancer, a claim Bayer firmly denies. But regardless, Bayer has already paid approximately $10 billion in glyphosate-related cases, with over 67,000 pending for which they've allocated $5.9 billion.
Recent court rulings haven't been in Bayer's favor. In a Georgia court, Bayer was ordered to fork over $2.02 billion to a plaintiff who accused Roundup of causing their cancer. Bayer is fighting the verdict. The majority of the remaining cases rest in a Missouri court, where Bayer is attempting to strike a settlement.
Should the settlement talks fail or the future of these lawsuits remain uncertain, Bayer allegedly plans to pursue a bankruptcy route for Monsanto with the help of legal and consulting advisors. As of now, Bayer has remained tight-lipped on the matter, declining to comment to the press.
But what does this mean exactly? In bankruptcy, Bayer would sidestep creditor claims, a move that has been employed by numerous U.S. companies before to free themselves of damage claims, although it's legally debatable and often promotes lengthy court battles. By filing for bankruptcy, Bayer would have the opportunity to close the loss-making, toxic chapter of Monsanto.
However, this measure could have serious consequences. By opting for bankruptcy, Bayer could be seen as evading accountability, dealing a blow to its reputation. The financial market might lose faith in Bayer, impacting the company's overall financial well-being. Additionally, filing for bankruptcy creates legal grey areas, such as the potential for fraudulent conveyance claims, drawn-out court battles, and challenges to past settlement agreements.
In essence, taking Monsanto down the bankruptcy road might provide a temporary relief to Bayer's financial burden, but it may also lead to a tidal wave of legal and public relations trouble. Making such a move could tarnish Bayer's reputation, paint them in an unethical light, and spark a new wave of legal disputes with the plaintiffs.
- The community and employment policies of Bayer may face scrutiny due to the alleged evasion of accountability if the company decides to send Monsanto into bankruptcy to avoid glyphosate lawsuits.
- In the finance industry, the potential bankruptcy of Monsanto could affect Bayer's business relationships and partnerships, leading to potential loss of partnerships and investors.
