Asbestos Trust Funds

Asbestos trust funds are financial reserves established by companies that filed for Chapter 11 bankruptcy due to overwhelming asbestos-related litigation. These trusts hold more than $30 billion in combined assets and exist to compensate individuals who developed mesothelioma, asbestosis, lung cancer, and other asbestos-related diseases as a result of exposure to the bankrupt company's products.¹

When asbestos manufacturers and distributors faced thousands of personal injury lawsuits in the 1980s and 1990s, many sought bankruptcy protection. Under Section 524(g) of the U.S. Bankruptcy Code, these companies were permitted to reorganize and establish dedicated trusts to handle current and future asbestos claims. The trust arrangement channels all asbestos-related claims away from the reorganized company and into the trust, which then evaluates and pays claims according to established criteria called Trust Distribution Procedures (TDP).²

Filing a trust fund claim does not require a lawsuit. Claimants submit documentation — including medical records confirming an asbestos-related diagnosis, evidence of exposure to the specific company's products, and employment or residential history — directly to the trust. Each trust has its own payment schedules and disease-level values. For mesothelioma, which is the most serious asbestos-related diagnosis, scheduled values are typically higher than for non-malignant conditions. Many claimants file claims with multiple trusts if they were exposed to products from several bankrupt companies.³

Trust fund claims can be pursued independently or alongside other legal actions such as personal injury lawsuits against solvent (non-bankrupt) defendants. An experienced asbestos attorney can identify which trusts a claimant may be eligible to file with and manage the documentation process. Trust fund claims are an important compensation avenue because they do not require courtroom litigation and can provide payments within months of filing.⁴

Asbestos trust funds use two primary methods for reviewing and paying claims:²

• Expedited review — The most common method. Claims that meet the trust's minimum medical and exposure criteria receive a predetermined scheduled value based on the disease category. Mesothelioma claims typically receive the highest scheduled values. This process is faster and more predictable, with most claims resolved within 6–12 months
• Individual review — Claimants who believe their case warrants higher compensation than the scheduled value can request individual review. The trust evaluates the specific circumstances of the claim — severity of illness, age, lost income, pain and suffering — and may award a higher amount. This process takes longer but can result in significantly greater compensation

Payment percentages are a critical concept. Because trusts must preserve assets for future claimants, they pay a percentage of the scheduled or awarded value rather than the full amount. This payment percentage varies by trust and is periodically adjusted. Some trusts pay as high as 100% of scheduled values, while others pay as low as 2–5%, depending on the trust's remaining assets and projected future claims.³

Major Asbestos Trust Funds

• Johns-Manville Personal Injury Settlement Trust — One of the largest and oldest trusts, established in 1988. Manville was the largest asbestos manufacturer in the U.S.
• Owens Corning/Fibreboard Trust — Created from the combined bankruptcy of two major building materials companies
• W.R. Grace Trust — Established following the bankruptcy of W.R. Grace, whose vermiculite mining operations in Libby, Montana caused widespread contamination
• USG Corporation Trust — Created by the major wallboard and ceiling tile manufacturer
• Harbison-Walker Refractories Trust — Covers claims from refractory product exposure
• Armstrong World Industries Trust — Covers flooring and ceiling product exposure claims