Asbestos Bankruptcy
When a company can no longer continue to cover the costs of liabilities from asbestos lawsuits, they often file Chapter 11 bankruptcy reorganization, hoping the preventions within section 524(g) of Chapter 11 will limit the company’s liability for damages from asbestos lawsuits.
A case filed under Chapter 11 is frequently referred to as a “reorganization bankruptcy” and it is a voluntary filing. Generally Chapter 11 bankruptcy allows the corporation to propose a plan of reorganization to keep its business alive and pay creditors over time. The trustee or the bankruptcy administrator plays a major role in monitoring the progress of a chapter 11 case and supervising its administration.
Asbestos Trust Fund
As a protective measure, many of these companies are required to establish trust funds to continue to compensate plaintiffs in asbestos lawsuits. Trust Funds ensure that injured individuals will still be covered for damages related to asbestos exposure, even after the companies no longer have the means to cover liabilities.
Once a trust is established, it is handled as a separate entity, managed by board of trustees unrelated to the company. When the number of claims becomes overwhelming, centralized claims processing partners are often brought in to combat the higher frequency of claims.
Because trusts are funded mostly through companies who have filed for bankruptcy and oftentimes no longer exist, a primary concern is trust fund solvency. To prevent the quick dissipation of funds, trusts pay percentages of total compensation to every eligible recipient.
Trust payments are paid in the form of scheduled installments contrived by the board of trustees. A matrix system helps to classify recipients into varying levels of payment percentages. The amount of compensation a recipient is eligible to receive depends on a percentage of the entire amount the individual is entitled to. These percentages can fluctuate based on a variety of factors, including the strength of the individual’s claim.
Example: Individual is entitled to $50,000 compensation for damages. The trust has delegated the recipient into a 50% payment percentage. The individual would receive $25,000.
The trusts are designed to make payments easily accessible to any individual with a credible claim. But in order to qualify for compensation you must prove that you or a loved one has suffered injuries that directly resulted from exposure to asbestos.
Although the general necessary information needed to file a claim is similar for all trusts, the specific criteria required to receive compensation differs by each trust. The process of organizing the necessary documentation for a specific trust can be overwhelming, so it is best to contact a knowledgeable mesothelioma/asbestos attorney such as TruLaw to help you through this process.
A mesothelioma/asbestos attorney can also help negotiate your payment percentage into a higher payout bracket, entitling you to more compensation.
This article “Asbestos Bankruptcy and Asbestos Trust Fund Explained” should be shared with anyone injured by asbestos considering how an Asbestos Bankruptcy or Asbestos trust fund might effect their verdict or settlement.