Note 12.  Contingencies

 

On October 2, 2023 (the “Petition Date”), notwithstanding the Company’s confidence in the safety of Oldco’s talc products, the Company’s subsidiaries, Oldco and Barretts Ventures Texas LLC ("BVT" and, together with Oldco, the “Chapter 11 Debtors”), filed voluntary petitions for relief under Chapter 11 of the U.S. Bankruptcy Code in the United States Bankruptcy Court for the Southern District of Texas (the “Chapter 11 Cases”) to address and comprehensively resolve Oldco’s liabilities associated with talc. Minerals Technologies Inc. and the Company’s other subsidiaries were not included in the Chapter 11 filing.

 

The Chapter 11 Debtors’ ultimate goal in the Chapter 11 Cases is to confirm a plan of reorganization under Section 524(g) of the U.S. Bankruptcy Code and utilize this provision of the Bankruptcy Code to establish a trust that will address all current and future talc-related claims. Discussions regarding the terms of a potential consensual plan of reorganization and the ultimate amount to be contributed to any trust are ongoing.

 

As of July 5, 2026, we had 986 open cases related to certain talc products previously sold by Oldco, which is an increase in volume from previous years. The following table details case activity related to talc products previously sold by Oldco:

 

 

These claims typically allege various theories of liability, including negligence, gross negligence, and strict liability and seek compensatory and, in some cases, punitive damages, but most of these claims do not provide adequate information to assess their merits, the likelihood that the Company will be found liable, or the magnitude of such liability, if any. We are unable to state an amount or range of amounts claimed in any of these lawsuits because state court pleading practices do not require the plaintiff to identify the amount of the claimed damage. The Company’s position, as stated publicly, is that the talc products sold by Oldco are safe and do not cause cancer.

 

During the pendency of the Chapter 11 Cases, the Company anticipates that the Chapter 11 Debtors will benefit from the operation of the automatic stay, which stays ongoing litigation in connection with talc-related claims against the Chapter 11 Debtors. In addition, the Bankruptcy Court temporarily enjoined the filing or continued prosecution of all talc-related claims against the Chapter 11 Debtors’ non-debtor affiliates, subject to certain exceptions. Such exceptions consist of claims premised solely on alleged inadequacies in testing of talc sold by Oldco. The Company is vigorously opposing and defending against these claims.

 

While costs relating to the talc-related cases have increased concurrently with the volume, the majority of these costs have historically been borne by Pfizer Inc. (“Pfizer”) in connection with certain agreements entered into in connection with the Company’s initial public offering in 1992, and as long as the litigation is subject to the stay under the Chapter 11 Cases (subject to certain exceptions), the Company will not be required to make substantial payments in respect thereof. The Company is entitled to indemnification, pursuant to agreement, for liabilities arising from sales prior to the initial public offering. On May 22, 2024, Pfizer filed a motion in the Chapter 11 Cases seeking permission to file a lawsuit against the Company related to the 1992 agreement. That motion has been adjourned, and Pfizer and the Company have agreed to mediate their disputes. The Company continues to receive information from Pfizer with respect to potential costs associated with the defense and/or settlement of talc-related cases that Pfizer alleges are not subject to indemnification. Although the Company believes that the talc products are safe and that claims to the contrary are without merit, the Company and Oldco have opportunistically settled certain talc-related cases not settled by Pfizer. None of such settlements were material to the Company.

 

In the second quarter of 2024, Oldco sold its talc assets under section 363 of the Bankruptcy Code. In addition, in the second quarter of 2024, the Company entered into a Debtor-in-Possession Credit Agreement with Oldco (the “DIP Credit Agreement”) and recorded a provision for credit loss of $30 million for the maximum principal amount under such Credit Agreement. In the second quarter of 2025, the Company agreed to amend the DIP Credit Agreement to increase the maximum principal amount under such Credit Agreement by $30 million. Proceeds of the sale of Oldco’s talc assets and funds drawn by Oldco under the DIP Credit Agreement have been and will be used to fund the Chapter 11 Cases.

Following the Chapter 11 filing, the activities of the Chapter 11 Debtors are now subject to review and oversight by the bankruptcy court. As a result, the Chapter 11 Debtors were deconsolidated as of the Petition Date, and their assets and liabilities were derecognized from the Company’s consolidated financial statements on a prospective basis.

 

On June 25, 2024, the committee representing talc claimants (the “Committee”) filed a motion to dismiss the Chapter 11 Cases. The Bankruptcy Court denied that motion on April 29, 2025 and the United States District Court for the Southern District of Texas (the “District Court”) denied the Committee's motion seeking leave to appeal that order on March 23, 2026.  

 

On May 14, 2025, the Bankruptcy Court entered a Report and Recommendation (i) recommending that the District Court determine whether any of the talc sold by Oldco contained sufficient quantity and form of asbestos to cause mesothelioma or other asbestos-related diseases and (ii) abating the Chapter 11 Cases pending a determination by the District Court. On June 22, 2026, the District Court adopted the Bankruptcy Court's recommendation. The District Court proceedings are ongoing. The Company supports this path forward.    

 

 

 

           The Parent Plan is subject in all respects to the resolution of the District Court proceedings. On July 16, 2026, the District Court confirmed that the Chapter 11 Cases remain abated pending a determination by the District Court. On July 21, 2026, the Bankruptcy Court entered an order canceling all hearings and deadlines in the bankruptcy case and confirming that the abatement is in full force pending any further order from the District Court.

 

In the first quarter of 2025, the Company recorded a provision to establish an accrual of $215 million for estimated costs to fund a trust to resolve all current and future talc-related claims as well as fund the Chapter 11 Cases and related litigation costs (including the aforementioned $30 million increase to the maximum principal amount of the DIP Credit Agreement). Concurrent with the filing of the Parent Plan, the Company recorded a charge of $290 million in the second quarter of 2026 to increase the Company's reserve for estimated costs. The parties have not yet reached a final resolution of all matters in the Chapter 11 Cases, and the Company is unable to estimate the possible loss or range of loss beyond the amount accrued.

 

The Company records accruals for loss contingencies associated with legal matters, including talc-related litigation and the Chapter 11 Cases, when it is probable that a liability will be incurred and the amount of the loss can be reasonably estimated. Amounts accrued for legal contingencies often result from a complex series of judgments about future events and uncertainties that rely heavily on estimates and assumptions including timing of related payments. The ability to make such estimates and judgments can be affected by various factors, including whether damages sought in the proceedings are unsubstantiated or indeterminate, the stage of the litigation, the factual and legal matters in dispute, the ability to achieve comprehensive settlements, the availability of co-defendants with substantial resources and assets participating in the litigation, and our evaluation of the unique attributes of each claim.

The broader litigation and regulatory environments for talc-related claims continue to evolve. Moreover, although the Chapter 11 Cases are progressing, it is not possible at this time to predict how the District Court will rule on the matters before it, the form of any ultimate resolution or when an ultimate resolution might occur. Given the foregoing factors, it is reasonably possible that the Company will incur a loss for liabilities associated with talc claims in excess of the amount accrued. This risk is based on the potential for new talc-related claims that could eventually be asserted together with their associated disposition cost and related legal costs, despite the automatic stay with respect to claims against the Chapter 11 Debtors, taking into account the portion of such hypothetical claims that may be subject to indemnification by Pfizer, as well as the inability to predict the amount that may ultimately be necessary to fully and finally resolve all of the Chapter 11 Debtors’ future talc-related claims in connection with a confirmed Chapter 11 plan of reorganization. In light of the uncertainties involved in such matters, the resolution of, or recognition of additional liabilities in connection with, current or future talc claims could have a material adverse effect on the Company’s results of operations, cash flows, and financial condition.