Bankruptcy Trust

A bankruptcy trust is a fund set up when an asbestos company files for bankruptcy, designed to pay current and future injury claims after the company can no longer be sued directly. Courts require these trusts so that people harmed by the company's asbestos products still have a way to recover compensation. Each trust has its own rules, claim forms, and payment schedules.

Origin

Asbestos bankruptcy trusts trace to the 1980s, particularly the Johns-Manville reorganization, and were formalized by Section 524(g) of the U.S. Bankruptcy Code in 1994, which lets a company channel its asbestos liabilities into a trust.

Significance in Asbestos Context

For a patient, bankruptcy trusts are often a major source of compensation, because many of the largest asbestos manufacturers went bankrupt decades ago and can no longer be taken to court. Instead, you file a claim with each relevant trust, supported by proof of diagnosis and exposure to that company's products. You can usually pursue trust claims and lawsuits against still-solvent companies at the same time. Because dozens of trusts exist, identifying every product you were exposed to matters, since each match may mean a separate claim.

Example Sentence

Because two of the companies that made the insulation he used had gone bankrupt, his attorney filed claims with their bankruptcy trusts in addition to suing the remaining defendants.

Related Terms

Trust Distribution Procedures, Section 524(g), Product Identification, Statute of Limitations, Solvent Defendant

Notes

• Gather product names, job sites, and dates; trust claims require showing exposure to that specific company's products.
• Trusts have their own filing deadlines and often pay a percentage of the scheduled value; ask your attorney about each trust's payment ratio.
• You can generally file trust claims alongside lawsuits; ask how the two interact in your state.