Section 524(g) Trust

A Section 524(g) trust is a special bankruptcy trust that a company creates to take over all its asbestos liabilities. Named for the provision of the U.S. Bankruptcy Code that authorizes it, this kind of trust lets a reorganized company channel every current and future asbestos claim into a single fund. In return, the company gets a court "channeling injunction" that bars people from suing it directly.

Origin

Congress enacted Section 524(g) in 1994, codifying the trust-and-injunction structure first crafted in the Johns-Manville bankruptcy of the 1980s.

Significance in Asbestos Context

For patients, a 524(g) trust is usually the only way to recover from a company that has gone through asbestos bankruptcy, because the channeling injunction blocks lawsuits against it. Each trust publishes Trust Distribution Procedures that spell out qualifying diagnoses, the exposure proof required, and scheduled payment values. Claims are paid at a "payment percentage" of their scheduled value, which can be reduced to keep the fund solvent for future victims. Your legal team files these claims separately from any lawsuit against companies that are still solvent.

Example Sentence

Because the manufacturer had reorganized under Section 524(g), her mesothelioma claim went to its trust rather than to a jury.

Related Terms

Asbestos Trust Fund, Manville Trust, Channeling Injunction, Trust Distribution Procedures, Payment Percentage, Bankruptcy

Notes

• Ask your attorney which 524(g) trusts your work history qualifies you to file against.
• Save exposure evidence such as employment, union, and product records; trusts require specific proof for each company.
• Note each trust's filing deadlines and current payment percentage, since values change over time.