Asbestos is a naturally occurring mineral that was used in a variety of industrial products. However, it is toxic to inhale or ingest. Once in the body, it can cause health problems, including asbestosis, lung cancer and mesothelioma.
Many companies put employees and consumers at risk by continuing to use asbestos in their products, even after company leaders understood its toxicity. As a result, many people who became sick because of this exposure chose to file lawsuits against the companies. To limit their losses, many of these companies filed for Chapter 11 bankruptcy.
Trusts were created as part of the bankruptcy process
Chapter 11 bankruptcy allowed the companies to reorganize and set aside money in a trust to be used as compensation for those who file claims against the trust. Bankruptcy insulated companies from future lawsuits while preventing them from closing down.
Asbestos bankruptcy trusts are created to pay claims on behalf of the companies that have filed bankruptcy. About 60 of these trusts exist.
Trustees manage asbestos bankruptcy trusts on behalf of the people who will file claims against the trust. Committees help represent the interests of the claimants.
How do these trusts affect someone who is entitled to compensation?
When an asbestos bankruptcy trust is created, it changes how someone with an asbestos-related illness pursues compensation. Instead of filing a lawsuit against the company, the person would file a claim against the asbestos bankruptcy trust.
The claims process can be very different than the litigation process. The claims process can even involve significant differences from trust to trust, which can be very confusing for people who are seeking compensation.
After a trust receives a claim, it reviews the related documents and assigns a value to the person’s injuries. The amount of money someone receives can depend on numerous factors, including the historical settlements that the company paid before bankruptcy.
Many trusts do not have the funding needed to pay every claim in full. This is why a payment percentage is often used to determine the compensation that someone offers.
However, this does not mean that those who have been injured cannot receive the compensation they deserve. Each situation is different, but there can be ways to help ensure that someone get the maximum compensation for their asbestos-related injuries.