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Mesothelioma and Asbestos Trust Funds

If you've been diagnosed with pleural mesothelioma, you've likely already considered talking to an attorney about suing those responsible for your exposure. But it's important to understand that it's not always possible to sue a company that has been negligent. In fact, a special provision of the U.S. Bankruptcy Code protects certain companies from future asbestos lawsuits.

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Although you can’t sue a company that has successfully reorganized under this provision, you may still have legal options. You may be eligible to file a claim against an asbestos bankruptcy trust. A pleural mesothelioma attorney can help you.

Asbestos Bankruptcy Trust Funds

Johns Manville and UNR Industries filed the first asbestos-related bankruptcies in the 1980s. Since then, around 100 companies have sought bankruptcy protection from asbestos liabilities.

Protecting these companies from asbestos lawsuits may sound unfair. After all, U.S. law allows people who have been negligently injured to obtain compensation from those responsible. But you may be surprised to learn that bankruptcy reorganization is sometimes the only way to ensure compensation for current and future claimants.

In some instances, a company faces such huge asbestos liabilities that there is a serious risk that it will run out of money to pay all claims. That’s what happened with Johns Manville.

In 1982, the asbestos product manufacturer was responsible for triggering over half of all asbestos litigation. New lawsuits were filed against the company at a rate of 425 per month. The company faced more than 12,000 asbestos lawsuits by more than 16,000 claimants. Given the long latency period of asbestos illnesses, there was no end in sight for the massive litigation. So Johns Manville sought bankruptcy protection under Chapter 11.

The U.S. Bankruptcy Court eventually approved Johns Manville’s bankruptcy reorganization. But the company’s reorganization plan created a trust to pay current and future asbestos claimants. Although the court stayed further litigation against Johns Manville, claimants who suffered asbestos exposure because of the company could file claims for compensation against the trust.

According to a periodic report filed by the trust with the court, the Manville Trust has paid almost $4.3 billion to settle approximately 797,000 asbestos claims since it was established in 1988. Without bankruptcy protection, Johns Manville would have likely folded before compensating hundreds of thousands of victims. But because of the trust, the company was able to stay afloat and develop other lines of business.

More importantly, people who developed pleural mesothelioma and other asbestos-related illnesses because of Johns Manville’s negligence were able to obtain compensation from the Manville Trust. In 2012, the trust paid more than $146 million to settle approximately 27,800 claims.

In 1994, Congress enacted section 524(g) of the Bankruptcy Code, which allows companies with significant asbestos liabilities to establish and fund trusts similar to the Mansville Trust to settle current and future asbestos claims. The Government Accountability Office estimates that there are about 60 asbestos trust funds with $37 billion in assets to pay claims.

The court stays further litigation against companies that are approved for reorganization. But approval is only available after lengthy bankruptcy proceedings in which the company, representatives of current and future claimants, and the company’s creditors make arguments to the court about how much is needed to fund the trust.

Filing an Asbestos Bankruptcy Trust Claim

Trust funds are formally created by “trust agreements.” The agreement is between the trust, which takes on the company’s asbestos liabilities, and the company, which agrees to fund the trust in the amount approved by the court. The trust is a separate entity from the company, and the company has no input in reviewing and paying claims.

A group of trustees supervises the operations of the trust, including investing its assets so that it maintains enough money to pay future claims. The trustees must also prepare periodic reports to the court detailing its assets and how much has been used to pay claims.

If you file a bankruptcy trust claim, you may be eligible for compensation. The procedures for filing, evaluating and paying claims are determined by trust procedures. A committee of claimant representatives has input into these procedures when a trust is established. The procedures are aimed at distributing the trust’s money fairly between claimants so that there is enough to pay everyone.

Because of the need to make sure money doesn’t run out, claimants often complain about the amount of time it takes to receive trust payments. Trust funds generally pay out a limited amount of money per year. So if your claim is approved, but the money set aside for the year has already been paid, your claim will be put on a waiting list for payment once trust distributions resume.

Claimants must also remember that the amount you are eligible to receive is limited compared to successful litigation awards. Trusts pay claims according to schedules which allot a certain, predetermined amount based on the type of injury and other factors. In order to receive compensation, you must submit certain evidence. Similar to courts, trusts have rules for submitting claims and supporting evidence.

Also similar to litigation, it is helpful to have an attorney prepare your trust claim so that you can make sure you satisfy the trust fund rules.

Danielle DiPietro

Danielle DiPietro

As a Patient Advocate, Danielle DiPietro’s mission is to guide patients through the process of pleural mesothelioma treatment, ensuring they receive the best medical, financial and emotional support available. Danielle is accredited by the Department of Veterans Affairs as an official Claims Agent, allowing her to provide professional guidance to veterans and family members who need to file a claim for specialized VA benefits.

Last Modified March 4, 2019

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