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Will we soon see the formation of another asbestos trust fund?

On Behalf of | Nov 2, 2021 | Mesothelioma/Asbestos-Related Illness

These days, you don’t need to worry much about asbestos in new products. But that wasn’t always the case. For decades, manufacturers used the toxic mineral in nearly everything. They used it even after they learned it caused cancer, and they only stopped when people started suing and Congress limited its use.

By that time, however, the manufacturers were facing dire financial straits. Their asbestos had contributed to countless cases of mesothelioma, asbestosis and lung cancer. The lawsuits were piling up, the potential damages looked overwhelming and many of the manufacturers filed for bankruptcy. Still, the courts directed the companies to repay their victims. As part of their bankruptcies, many of these companies had to fund asbestos trusts.

Many companies that filed for asbestos bankruptcy are still thriving

The truth is that bankruptcy doesn’t always mean the end of a business. Companies often use bankruptcy to escape overwhelming debts. Once they shrug off the debt, they can get back to making money, and many do.

Still, bankruptcy tends to spell the end of a company’s financial obligation to asbestos victims. If you can trace your mesothelioma back to a company that created an asbestos trust as part of its reorganization, you will most likely seek your compensation from a trust fund, rather than through a lawsuit.

The bankruptcy case of LTL Management

While asbestos trusts may not generally make the front-page news, the case of LTL Management has drawn a fair deal of attention. According to National Public Radio (NPR), LTL Management filed for bankruptcy shortly after it entered existence as a Johnson & Johnson spin-off. Presumably as a response to the roughly 38,000 lawsuits the company is currently facing, Johnson & Johnson created the company in Texas, then saddled it with all its talc liability.

The move is meant to free Johnson & Johnson from the ongoing litigation over its talc products. But while NPR and members of Congress focus on whether the company is unfairly using bankruptcy to shield itself, it’s worth noting that the talc cases have had mixed results. Even as the bankruptcy case unfolds, Johnson & Johnson claims its talc products are safe, and recent FDA testing of 50 talc products found no asbestos.

What this means for mesothelioma and asbestos victims

At this point, it’s uncertain how the bankruptcy case will proceed. However, if Johnson & Johnson does successfully shift its talc and asbestos liability from the parent company to the bankrupted LTL Management, victims will likely pursue their claims through an asbestos trust fund, rather than lawsuits.

This would mean victims would face a different process and burden of proof to claim compensation for their suffering. While the trust fund would exist as acknowledgement of potential liability, its managers would need to guarantee the funds go only to qualified victims. They would also look to settle each case for as little as possible, to retain funds for future payments. As a result, if you were to seek compensation from the fund, you would want to understand the process and evidence.

At this point, NPR claims Johnson & Johnson has designated $2 billion to fund the LTL Management talc trust fund.

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