Miyoshi America: 524(g) Talc Channeling Plan

Miyoshi America, Inc., a cosmetic ingredient manufacturer incorporated in Texas and headquartered in Connecticut, filed a prepackaged chapter 11 petition on April 27, 2026, in the U.S. Bankruptcy Court for the Southern District of Texas. The filing seeks to resolve escalating talc- and asbestos-related personal injury litigation through a plan of reorganization that includes a section 524(g) channeling injunction directing all current and future talc claims to a dedicated trust. The case is assigned to Judge Christopher M. Lopez.

The trust will be funded with $19 million in cash and a $1 million promissory note from the debtor, backed by a $20 million equity investment from Miyoshi Kasei, Inc. ("MKI"), the debtor's Japanese parent and sole equity holder. MKI is also providing up to $20 million in DIP financing, including a roll-up of prepetition intercompany debt. A combined hearing on disclosure statement approval and plan confirmation is scheduled for May 28, 2026 — 31 days after the petition date.

Debtor	Miyoshi America, Inc.
Court	U.S. Bankruptcy Court, Southern District of Texas (Houston Division)
Case Number	26-90522
Judge	Hon. Christopher M. Lopez
Petition Date	April 27, 2026
Plan Type	Prepackaged with Section 524(g) Channeling Injunction
Combined Hearing	May 28, 2026
Claims Agent	Stretto, Inc.
DIP Facility	Up to $20M from MKI ($5M new money, $15M roll-up)

Talc Litigation Surge and Escalating Defense Costs

Miyoshi America manufactures and sells specialized cosmetic ingredients, including talc-based products, to cosmetic companies. MKI, a Japanese company, established the U.S. subsidiary in 1985 and remains the sole equity holder. The company adopted its current name in 2016 and employs approximately 62 people at facilities in Dayville, Connecticut, and Valley Cottage, New York.

The first-day declaration describes the debtor's core business as processing pigments, composites, and substrates for cosmetic manufacturers, including iron oxides and titanium dioxides used to improve color, duration, and feel in makeup and other beauty products. The debtor also manufactures ingredients used in sunscreen products. Its assets include real estate, equipment, cash accounts, receivables, raw materials, inventory, intellectual property, goodwill, and other tax assets with a stated book value of approximately $30.7 million.

Historically, approximately 5% of the company's sales involved surface-treated talc-based ingredients. Miyoshi America fully discontinued all talc-based product sales in mid-2025 and currently relies exclusively on non-talc products. The company has never produced non-cosmetic talc products such as baby powder or foot powders.

The chapter 11 filing was driven by escalating talc- and asbestos-related personal injury litigation. Plaintiffs allege that the debtor's talc-based products were contaminated with asbestos, resulting in mesothelioma or similar asbestos-related diseases. The debtor disputes all such liability and contends its products were safe and never contaminated. The first personal injury case against Miyoshi America was filed in 2015. Cases filed against the debtor by year:

• 2022: 5 cases
• 2023: 35 cases
• 2024: 34 cases
• 2025: 167 cases

More than 200 cases are currently pending. While the debtor has resolved cases through dismissal, summary judgment, or settlement — and has never had a judgment entered against it — the cumulative costs of defense became what the debtor characterized as an "unsustainable" strain on its liquidity by mid-2025.

The first-day declaration gives the debtor's factual defense in more detail. Miyoshi says it bought cosmetic talc-based products from suppliers in Japan, required suppliers to test for asbestos contamination, used CTFA J4-1 X-ray diffraction testing on talc-based products it received, and has no record that its own testing or customer supplementary testing ever found asbestos contamination in product it supplied. The debtor also states it never sold baby powder, foot powder, or similar non-cosmetic talc products, and that no ovarian-cancer body-powder claims have been filed against it. Those assertions frame the proposed 524(g) trust as a cost-control and channeling mechanism rather than an admission of liability.

The debtor believes no insurance coverage exists for the defense or resolution of talc claims. No insurer has funded any defense costs or settlement amounts to date. The debtor retained PolicyFind, an insurance archaeology firm, to investigate whether any unknown policies could provide coverage. Without the chapter 11 filing, the debtor stated it would have faced liquidation, resulting in the loss of all 62 jobs and reduced recoveries for claimants.

MKI Intercompany Financing and DIP Facility

Prepetition debt. The debtor's sole source of funded debt is an intercompany loan from MKI. An initial $3 million prepetition loan was entered into on June 10, 2025. This was subsequently refinanced under an Intercompany Loan and Security Agreement dated August 1, 2025, with a facility size of $15 million. As of the disclosure statement date, the outstanding principal balance was approximately $13 million. The loan accrues interest at 7.50% per annum and is secured by the debtor's assets. In addition, the debtor estimates approximately $1.1 million in outstanding supplier and trade debt.

DIP facility. The debtor filed an emergency motion seeking authorization for postpetition financing from MKI. The DIP facility provides up to $5 million in new money — $2 million available on the interim order, an additional $3 million on the final order — and a roll-up of up to $15 million in prepetition obligations ($5 million on interim, an additional $10 million on final), for a total commitment of up to $20 million. Interest accrues at 7.50% per annum, with all accrued interest deferred and payable in cash or in kind at maturity. The default rate adds 5% above the applicable rate. The facility matures at the earliest of June 30, 2026, the plan effective date, an acceleration event, or conversion or dismissal of the case.

The DIP lien is a super-priority lien on all DIP collateral, subject to a carve-out for professional and U.S. Trustee fees. A limited investigation carve-out of up to $50,000 is available for any creditors' committee or talc claimants' committee to investigate — but not prosecute — claims against the prepetition secured party. The facility requires plan confirmation by May 31, 2026, and a plan effective date by June 30, 2026.

Market test. With the assistance of Smith Goffman Partners, the debtor contacted 11 financial institutions regarding postpetition financing. None were willing to lend on an unsecured or junior basis or engage in a priming fight with the existing secured lender. MKI refused to consent to any financing with priming or pari passu liens, which led the debtor to negotiate the DIP facility directly with its parent.

Prepackaged Plan and Section 524(g) Channeling Trust

The debtor filed a prepackaged chapter 11 plan seeking to resolve all current and future talc-related personal injury claims through a channeling injunction under sections 524(g), 1123(b)(6), and 105(a) of the Bankruptcy Code. Administrative expense claims, professional fee claims, DIP financing obligations, and priority tax claims are all unimpaired and paid in full outside the classified structure.

Plan treatment by class. Among the classified claims, Classes 1 through 3 — priority non-tax claims, secured claims, and general unsecured claims — are all unimpaired and receive 100% recovery. Class 4 (Talc Personal Injury Claims) is the sole impaired creditor class, with all claims channeled to the trust for distribution under the Talc Personal Injury Trust Distribution Procedures. Class 5 (Prepetition Financing Facility Claims) is impaired but receives 100% recovery. Class 6 (Intercompany Claims) is unimpaired. Class 7 (Miyoshi Equity Interests) is impaired and cancelled, receiving no distribution.

Trust funding. The Talc Personal Injury Trust will be funded on the effective date through the "Miyoshi Contribution," consisting of $19 million in cash from the debtor on its own behalf and for non-debtor affiliates, a $1 million non-interest-bearing promissory note from the reorganized debtor maturing six months after the effective date, an assignment of talc personal injury insurance assets, and an assignment of certain potential estate causes of action. The $1 million note is secured by a first-priority lien on 50.1% of reorganized debtor stock.

The disclosure statement asserts that the total $20 million Miyoshi Contribution "vastly exceeds" any potential recovery available to holders of talc personal injury claims in a chapter 7 liquidation, primarily because MKI's $20 million equity investment would not be available in a liquidation scenario.

MKI equity investment, exit financing, and post-reorganization governance. MKI will contribute a $20 million cash equity investment to the reorganized debtor on the effective date. MKI will also advance exit financing sufficient to satisfy $15 million of outstanding DIP obligations and any remaining prepetition financing amounts. Any balance beyond $15 million is treated as exchanged for reorganized debtor stock. The reorganized debtor is prohibited from making any repayments on the exit financing until all monetary obligations to the trust are fully satisfied. MKI will receive 100% of the reorganized debtor stock, with 50.1% pledged to the trust as security for the $1 million promissory note. Governance will be overseen by the current board of directors — Taizo Miyoshi, Tim (Kaoru) Takagi, and Edward Houlihan — unless MKI designates alternatives.

Channeling injunction and releases. A permanent injunction under sections 524(g) and 105(a) will channel all talc personal injury claims and future demands against the debtor, reorganized debtor, and other "Protected Parties" exclusively to the trust. An Insurance Entity Injunction will also be issued. The plan provides broad debtor releases covering the debtor, reorganized debtor, protected parties, the talc claimants' committee, and the future claimants' representative. Exculpated fiduciaries include the debtor, reorganized debtor, talc claimants' committee, future claimants' representative, and their respective directors, officers, and professionals. All preference actions are released under the plan.

Prepetition Negotiations and Ad Hoc Committee

In July 2025, the debtor began outreach to plaintiff law firms. By September 2025, seven firms representing over 85% of pending claims organized into an Ad Hoc Committee. An eighth firm joined in January 2026, and as of March 2026, the committee represented approximately 90% of filed cases.

The committee firms identified in the first-day declaration are Belluck Law LLP, Dean Omar Branham Shirley LLP, Levy Konigsberg LLC, Maune Raichle Harley French and Mudd LLC, Meirowitz and Wasserberg LLP, Simmons Hanly Conroy LLP, Simon Greenstone Panatier PC, and SWMW Law. The committee retained Caplin and Drysdale as bankruptcy counsel, Gilbert as insurance counsel, and Province as financial advisor.

In January 2026, the debtor engaged Hon. Shelley C. Chapman (Ret.) as the Prepetition Future Claimants' Representative. The debtor intends to file a motion during the chapter 11 case to formally appoint her, and she is anticipated to retain Willkie Farr and Gallagher LLP as counsel.

A months-long due diligence process ran from fall 2025 through early 2026, including the creation of a virtual data room, production of hundreds of thousands of pages of records, and a deposition of a debtor representative. The review covered Miyoshi's historical talc involvement, present and future talc liabilities, projected claim values, insurance coverage, transactions with MKI and other affiliates, intercompany contracts, license and royalty arrangements, historical dividends, and MKI financial information. Numerous incremental term sheet drafts were exchanged, and several in-person and virtual meetings were held. On January 30, 2026, the Ad Hoc Committee presented the final Plan Support and Restructuring Term Sheet, subsequently executed by the committee members, the debtor, MKI, and the Prepetition Future Claimants' Representative.

Solicitation and voting. Solicitation commenced on March 13, 2026, with a voting record date of March 27, 2026 and a voting deadline of April 27, 2026. The voting declaration filed by Stretto reported near-unanimous support: Class 4 (Talc Personal Injury Claims) voted 185 to 1 in favor, and Class 5 (Prepetition Financing Facility Claims) voted 1 to 0 in favor. Twenty-six ballots were from parties not on the creditor matrix, two were duplicates, and 33 were submitted under "Option B" certification pending documentation.

Professional retentions. The debtor retained Mayer Brown LLP as restructuring counsel and national talc litigation defense counsel, Alvarez & Marsal North America as financial advisor and claims consultant, Smith Goffman Partners as restructuring advisor and investment banker, and Stretto, Inc. as claims, noticing, and solicitation agent. The Ad Hoc Committee retained Caplin and Drysdale as bankruptcy counsel, Gilbert as insurance counsel, and Province as financial advisor.

Key Timeline

Date	Event
1985	Company incorporated as U.S. Cosmetics Corp.
2015	First talc personal injury case filed against debtor
Mid-2025	Talc-based product sales discontinued
June 10, 2025	Initial $3M prepetition loan from MKI
August 1, 2025	Prepetition loan refinanced under $15M facility
September 2025	Ad Hoc Committee formed (7 firms, 85%+ of claims)
January 2026	Hon. Shelley C. Chapman engaged as Future Claimants' Representative
January 30, 2026	Plan Support and Restructuring Term Sheet executed
March 13, 2026	Solicitation commenced
April 27, 2026	Petition filed (S.D. Tex., Houston Division)
May 19, 2026	Objection deadline
May 28, 2026	Combined hearing (disclosure statement approval and confirmation)
May 31, 2026	Confirmation order outside date
June 30, 2026	Plan effective date outside date

Frequently Asked Questions

What caused the Miyoshi America bankruptcy?

The filing was driven by escalating talc- and asbestos-related personal injury litigation. Case filings against the debtor grew from 5 in 2022 to 167 in 2025, with over 200 currently pending. The debtor disputes all liability and has never had a judgment entered against it, but defense costs became unsustainable. The debtor believes no insurance coverage exists for talc claims.

What is the section 524(g) trust and how is it funded?

The prepackaged plan creates a Talc Personal Injury Trust funded with $19 million in cash and a $1 million promissory note, backed by a $20 million equity investment from MKI. A permanent channeling injunction under section 524(g) directs all current and future talc personal injury claims exclusively to the trust.

Will general unsecured creditors be paid in full?

Yes. General unsecured claims (Class 3) are unimpaired under the plan and will receive 100% recovery. Only talc personal injury claims (Class 4) and equity interests (Class 7) are impaired.

Who is the claims agent for Miyoshi America?

Stretto, Inc. serves as the claims, noticing, and solicitation agent. The firm maintains the official claims register and distributes case notifications to creditors and parties in interest.

When is the confirmation hearing?

A combined hearing on disclosure statement approval and plan confirmation is scheduled for May 28, 2026, before Judge Christopher M. Lopez in Houston.

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