Bankruptcy Trust Claim

A bankruptcy trust claim is a claim filed against a special fund set up when an asbestos company goes bankrupt to pay current and future victims. Rather than suing the company in court, you submit a claim to its trust, which reviews it against published criteria and pays a scheduled amount. Because many major asbestos makers went bankrupt, a single patient often has claims against several different trusts.

Origin

These trusts grew out of Section 524(g) of the U.S. Bankruptcy Code, added in 1994, which built on the earlier Johns-Manville bankruptcy of the 1980s. The provision lets a reorganized company channel all present and future asbestos liabilities into a trust that pays claims over time.

Significance in Asbestos Context

Trust claims are often a major part of the compensation available to you, and they run in parallel with any lawsuits against companies that are still solvent. Each trust publishes its own criteria, such as required diagnosis, exposure evidence, and payment percentages, so your legal team matches your exposure history to every trust that fits. The process is generally faster and more predictable than a trial, though trusts often pay only a fraction of the scheduled value because they must reserve money for future victims. Strong product identification and medical documentation are what make trust claims succeed.

Example Sentence

After the diagnosis, the attorney identified six bankruptcy trust claims the patient qualified for based on the insulation brands he had used.

Related Terms

Section 524(g), Trust Distribution Procedures, Product Identification, Successor Liability, Statute of Limitations, Manville Trust

Notes

• Work with your attorney to list every asbestos product and manufacturer you were exposed to, since each match may open a separate trust claim.
• Gather a firm pathology diagnosis and any exposure evidence early, since trusts require specific documentation before paying.
• Be aware of filing deadlines; the statute of limitations can apply to trust claims, so act promptly after diagnosis.