524(g) Trust

A 524(g) trust is a special bankruptcy trust that a company overwhelmed by asbestos lawsuits can set up to pay current and future victims. Named for Section 524(g) of the U.S. Bankruptcy Code, it lets the reorganized company channel all asbestos claims to the trust and shields it from future suits. Dozens of these trusts hold billions of dollars to compensate people with asbestos disease.

Origin

Section 524(g) was added to the Bankruptcy Code by Congress in 1994, building on the model created in the Johns-Manville bankruptcy of the 1980s. It gave later asbestos bankruptcies a clear legal mechanism to set up trusts and issue a "channeling injunction."

Significance in Asbestos Context

Many of the largest asbestos manufacturers, including Johns-Manville, Owens Corning, and Armstrong, went bankrupt and now pay through 524(g) trusts rather than in court. For a patient, this means some claims are filed with trusts rather than, or in addition to, lawsuits against still-solvent defendants. Each trust has its own criteria, required proof, and payment schedule, and most pay only a percentage of the scheduled value because they must reserve funds for future victims. Identifying which trusts a patient's exposures qualify for, based on the products they encountered, is a core part of pursuing full compensation.

Example Sentence

Because the insulation maker had reorganized years earlier, his claim went to its 524(g) trust, which paid a set percentage of the scheduled amount.

Related Terms

Bankruptcy Trust, Channeling Injunction, Trust Distribution Procedures, Johns-Manville, Product Identification, Claim Value

Notes

• Product identification drives trust eligibility; document every asbestos product you were exposed to.
• Trust claims can often be pursued alongside lawsuits against solvent defendants; ask your legal team about both.
• Each trust sets its own evidence rules and payment percentage, and these change as trust funds are drawn down, so timing can matter.