Mesothelioma and Asbestos Trust Funds
When a company is unable to pay its liabilities related to asbestos exposure, it may often end up filing for Chapter 11 bankruptcy protection. In such cases, courts have determined that companies must establish trust funds that have enough money to pay compensation to victims of asbestos-related diseases, such asmesothelioma.
Development of Asbestos Bankruptcy Trusts
After the discovery of a link between asbestos and deadly diseases like mesothelioma in the 1960s, companies that mined asbestos, produced products containing asbestos, or used large amounts of asbestos-filled materials in their operations started to find themselves as defendants in many lawsuits which claimed damages for personal injury or wrongful death. Faced with this mass of litigation, some of these companies found they could not sufficiently pay the settlements and jury awards that came out of these lawsuits.
As a result, a number of companies began to file for bankruptcy, hoping that by doing so they would be able to cancel or limit their liability under the protections provided by section 524(g) of the Chapter 11 bankruptcy code. In many of these cases, companies were required to set up trust funds that would providecompensation to legitimate claimants, both currently and in the future. These trust funds were established as separate organizations, managed by a board of trustees, distinct from the companies that originally caused the asbestos exposure.
It has been estimated that since the first asbestos-related bankruptcies were filed by Johns-Manville Corporation and UNR Industries, approximately 100 asbestos companies have since gone on to file for Chapter 11 reorganization. Not all of these companies have established trusts – some company reorganizations were not approved, and other companies were ultimately forced to file Chapter 7 bankruptcy instead, which required a liquidation of their assets to pay debtors.
How Asbestos Trust Funds Work
Bankruptcy trusts established under section 524(g) are set up to pay mesothelioma claims quickly with as little overhead cost as possible. Some trusts use centralized claims processing partners to help manage the significant amount of claims that come in, which number into the thousands. Some of the largest trusts are managed by such centralized processing, making it easier for victims to receive the compensation they are entitled to.
Claim Eligibility
To file a claim with a trust, generally you have to prove that you or your loved one was exposed at a particular worksite or that exposure resulted from a particular product. Many asbestos trusts also have established exposure and medical criteria that set a baseline for those looking to seek compensation. Specifically for mesothelioma, most trusts use the same (or very similar) criteria to meet the minimum level of eligibility.
Since each trust fund sets its own eligibility criteria, the best way to determine if you are eligible is to talk with a skilled mesothelioma attorney who can break down the requirements for you and explain their implications.
Trust Fund Payment Amounts
Each trust fund sets up its own schedule for making payments, usually based on a percentage of the amount the claimant is entitled to. For example, if a claimant is determined to be entitled to receive $100,000, a trust fund with a 30% payment percentage would end up giving the claimant $30,000. The percentage of a claim that a trust fund pays may change over time.
The actual amount a claimant can receive from a trust fund ultimately depends on many different factors, including their eligibility. An experienced mesothelioma lawyer negotiates with the trust fund to get you the most substantial amount of compensation possible.
Trust Fund Solvency
One big worry with asbestos trust funds is whether they will have enough money to continue making payments to future claimants. A lot of trust funds were established by companies that are no longer in existence, and the money they have in the fund may limit how much they are able to actually pay now and in the future.
Part of the problem is that trusts are often initially funded based on estimates made during bankruptcy proceedings. Companies going through the bankruptcy will often try to pay as little as possible into the trust, while those arguing for mesothelioma victims will typically try to have more money set aside. As has been shown time and again, the estimates made during bankruptcy trials are often lower than is necessary, especially as more and more victims of asbestos exposure start to emerge.
One prime example of an underfunded trust fund is the Johns-Manville Trust, which started out with $2.5 billion to pay claimants. However, since its inception, the Johns-Manville Trust has had to stop payments at least twice, and the payout percentage has been reduced to a mere 10% of the amount claimants are entitled to.
Regardless of their starting amounts, trust funds are generally required to stretch their funds as far as possible to ensure they have at least some money to make future claims. This can place added pressure on trust funds to make smaller payments to current claimants in fear that they won’t have enough money to pay claimants who step forward in the future.
Read more: http://www.mesothelioma.com/lawyer/compensation/trusts/#ixzz41Y7vreWx
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