Asbestos Bankruptcy Trusts allow patients to recover at least some damages to help defray the costs of medical treatment and assist in legal options against companies that have not yet declared bankruptcy.
The amount of legal liability, court costs and the resulting financial compensation owed as a result of mesothelioma cases continues to mount. In 1977, in the face of an upswing of asbestos-related cases, the United States Congress stepped in to relieve the strain to both the court system and corporations presumed guilty for asbestos exposure by developing a system of asbestos bankruptcy trusts. These trusts allowed the liable companies to file for protection under Chapter 11 bankruptcy laws. They were also intended to speed up payout to injury claimants and to alleviate the clogged court system.
How Asbestos Bankruptcy Trusts Work
When a corporation with asbestos-related financial responsibility files Chapter 11, it isn’t released from compensation for injuries. Rather, the corporations must work with their attorneys to set up a reorganization plan through the courts, which often features a settlement trust. This trust will process, liquidate and pay all asbestos claims against the company.
Dozens of these corporate asbestos bankruptcy trusts have been set up in the U.S. Each one varies in its medical and asbestos exposure requirements before a claim value is determined and paid out. Unfortunately, only a set percentage of its value is then applied and paid, generally varying from 5 to 15 percent.
Given that amount, filing a claim against an asbestos bankruptcy trust is not ideal. However, asbestos bankruptcy trusts have prevented many corporations from using bankruptcy or closure as a shield against claiming any kind of responsibility altogether. Had the companies been able to file for bankruptcy protection without the claim trust, the many victims of asbestos would have been left without legal recourse against those who caused their cancer.
Because of this, trusts allow patients to recover at least some damages to help defray the costs of medical treatment as well as providing financial stability for their families. Asbestos bankruptcy trusts also benefits those who wish to bring legal action against companies that have not yet declared bankruptcy by freeing up the resources of the court system.