Asbestos Bankruptcy Trust

An asbestos bankruptcy trust is a fund set up by a company that went bankrupt because of asbestos lawsuits, created to pay current and future victims. When such a company reorganizes, it places money into a trust that then handles claims in place of the original company. Dozens of these trusts exist, holding tens of billions of dollars set aside for people harmed by their products.

Origin

The model began with the Johns-Manville reorganization in the 1980s, the first major company bankrupted by asbestos liability. Congress formalized the approach in 1994 by adding Section 524(g) to the Bankruptcy Code, which lets a company channel all asbestos claims into a trust and shields the reorganized company from future suits.

Significance in Asbestos Context

For patients, bankruptcy trusts are often a major source of compensation, separate from lawsuits against companies still in business. Many of the manufacturers most responsible for asbestos products went bankrupt, so their liability now lives in these trusts. Each trust has its own Trust Distribution Procedures, setting the diseases it covers, the evidence it needs, and what it pays. A patient with a documented work history may qualify for claims against several trusts at once. Because trusts often pay only a percentage of a claim's scheduled value, and because filing requires specific product identification, patients usually work with an attorney to identify every trust their exposure supports.

Example Sentence

Because several of the companies whose insulation he handled had gone bankrupt, his attorney filed claims against multiple asbestos bankruptcy trusts.

Related Terms

Trust Distribution Procedures, Section 524(g), Payment Percentage, Product Identification, Johns-Manville Trust, Scheduled Value

Notes

• Ask your attorney to identify every trust your work history may support; there are dozens, and you can have claims against several.
• Preserve records that identify the specific asbestos products and manufacturers you were exposed to; trusts require product identification.
• Understand that trust claims are usually separate from, and can be pursued alongside, lawsuits against companies still in business.