Bankruptcy Trust
A bankruptcy trust is a fund established under Section 524(g) of the U.S. Bankruptcy Code when an asbestos-liable company undergoes Chapter 11 reorganization. The trust assumes the company's asbestos liabilities and pays claims from current and future victims according to court-approved payment criteria and schedules.
Bankruptcy trusts and asbestos trust funds refer to the same mechanism. When companies like Johns-Manville, W.R. Grace, Owens Corning, and dozens of others faced overwhelming asbestos lawsuits, they filed for bankruptcy protection and established these trusts as part of their reorganization plans. The trusts are funded by the company's assets and, in some cases, insurance proceeds.
Each trust operates independently with its own Trust Distribution Procedures (TDP), which specify the medical evidence required, payment categories by disease level, and the current payment percentage. Mesothelioma claimants typically qualify for the highest disease category. Payment percentages are adjusted over time to ensure the trust can pay all current and future claimants fairly.
Filing a bankruptcy trust claim is an administrative process that does not require going to court. An experienced attorney can identify which trusts are relevant to your exposure history and file claims against multiple trusts simultaneously. Trust claims can be pursued alongside personal injury lawsuits against solvent (non-bankrupt) defendants. Explore your compensation options.
- Also known as
- Section 524(g) trust, Asbestos bankruptcy trust, Reorganization trust
- Category
- Legal
- Related terms
- Asbestos Trust Fund, Personal Injury Claim, Settlement, Statute of Limitations, Contingency Fee
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