Payment Percentage

The Payment Percentage is the fraction of a claim's scheduled or liquidated value that an asbestos bankruptcy trust actually pays out to claimants. Because trusts must conserve limited assets to compensate both current and future victims, they almost never pay the full value of a claim. Instead, they pay a set percentage that is periodically adjusted based on the trust's financial health and projected liabilities.

Origin

The concept arose out of Section 524(g) of the U.S. Bankruptcy Code, enacted in 1994, which authorized asbestos defendants to channel current and future asbestos liabilities into trusts. To ensure fair treatment of unknown future claimants, trusts developed the Payment Percentage mechanism, with the Manville Personal Injury Settlement Trust (1988) serving as the early model.

Significance in Asbestos Context

For patients pursuing trust claims, the Payment Percentage is what determines the actual dollar amount they receive, not the headline value listed in the trust's claim matrix. For example, a mesothelioma claim with a scheduled value of $200,000 against a trust paying at 10% will yield $20,000. Patients typically have claims against multiple trusts (often dozens), and each trust has its own Payment Percentage, which can change over time as the trust reassesses its solvency. Your legal team will track current Payment Percentages, file claims against every applicable trust, and time submissions strategically because rates can be reduced (rarely increased) by trustee action.

Example Sentence

When the Manville Trust cut its pro rata share from 5.1% to 4.3% in April 2020, amid the COVID-19 market drop, claims paid after the cut recovered about 16% less than otherwise-identical claims paid just before it; when the trust raised the share back to 5.1% in February 2021, it made retroactive payments to close that gap.

Related Terms

Bankruptcy Trust, 524(g) Trust, Scheduled Value, Trust Distribution Procedures (TDP), Claim Matrix, Pro Rata Share

Notes

• Ask your attorney for a current list of every asbestos trust where you may have a claim, the scheduled value for your disease, and the current Payment Percentage for each. Together these determine your realistic trust recovery.
• Preserve all employment records, union records, Social Security earnings statements, and product identification evidence; trusts require proof of exposure to that specific company's products, and weak documentation can drop you to a lower payment tier.
• Payment Percentages are publicly disclosed in each trust's Trust Distribution Procedures (TDP) and updated on trust websites. Your legal team should be checking these before deciding when to file.
• Be aware that some states require disclosure of trust claims and recoveries in tort lawsuits against solvent defendants; the interaction between trust Payment Percentages and civil settlements can affect overall recovery strategy.