Trust Advisory Committee

A Trust Advisory Committee is a small group, usually made up of asbestos plaintiffs' lawyers, that represents current claimants in the running of an asbestos bankruptcy trust. Trustees generally need the committee's consent for major changes, such as amending the claims procedures or the payment percentage.

Origin

Trust advisory committees grew out of the committees that represent asbestos claimants during a company's Chapter 11 case. When the plan is confirmed and the trust is created, the trust agreement typically sets up a committee to carry that role forward. It became a standard feature of trusts formed under Section 524(g) of the Bankruptcy Code, enacted in 1994.

Significance in Asbestos Context

A trust advisory committee is one of the voices of people with present claims inside a trust. Together with the Future Claimants' Representative, it usually must agree before the trustees can change the trust distribution procedures, the scheduled values, the payment percentage or other key rules. Those decisions directly affect what an individual claimant is paid and how quickly. Committee members are often lawyers from firms that file many claims with the same trust, which supporters say brings practical knowledge of how claims work and critics say creates a conflict of interest. Defendants in the tort system have also pointed to committee membership when arguing for more trust transparency. For a claimant, the committee is usually invisible: you do not deal with it directly, but its decisions shape the rules your lawyer works under.

Example Sentence

When the trust proposed lowering its payment percentage, the trustees first needed the consent of the Trust Advisory Committee and the Future Claimants' Representative.

Related Terms

Future Claimants' Representative, Trust Distribution Procedures, Payment Percentage, 524(g) Trust, Bankruptcy Trust Transparency, Plan of Reorganization

Notes

• You do not need to contact a trust's advisory committee; your lawyer files and follows up on the claim.
• When a trust announces a change in payment percentage or procedures, ask your lawyer whether it affects a pending claim.