Since 1982, more than 70 companies named as defendants in asbestos and chemical lawsuits have filed for bankruptcy. A few of these companies include:
- Johns-Manville
- Congoleum Corp.
- Owens Corning
- Federal Mogul
- W.R. Grace
These bankruptcies have been highly publicized. Many asbestos victims who hear of the bankruptcies assume that once the company files bankruptcy, there is no longer a way to recover any kind of financial compensation. This is not usually correct, and that’s why it’s important to consult an experienced SEGLaw asbestos attorney as soon as you can after diagnosis.
What is An Asbestos Bankruptcy Trust?
When an asbestos company files bankruptcy, this usually doesn’t mean that it will no longer conduct business. Instead, it means that the company is reorganizing, and that its assets such as cash, stock and insurance are tallied against debts that are owed. The court then decides which, if any, of the debts the company must repay, and at what percentage. Asbestos companies often file bankruptcy in the face of dozens of asbestos lawsuits that could potentially cost the company millions of dollars each. Once bankruptcy is filed, a lawsuit can no longer be brought against the company.
Instead, the company works to create a court approved plan for compensating victims. This plan is called an Asbestos Bankruptcy Trust.
How Are Asbestos Victims’ Rights Protected?
When a company creates an asbestos bankruptcy trust, it must work with a Claimant Board. This board is usually made up of attorneys that represent current claimants (victims). The company must also work with someone that represents future claims against the company. The Claimant Board and Future Claims Representative must work together to make certain that the funds are both available as soon as possible for current claimants, and that an equal share will also be available for future claimants.
Any trust distribution plan that the company proposes must be accepted in a vote by at least 75% of the Claimant Board and be approved by the bankruptcy court.
How Does An Asbestos Bankruptcy Trust Compensate Victims?
It can take up to 5 or 6 years after a company files bankruptcy for a bankruptcy trust to be formed. This means that lawsuits against the company that were pending at the time of bankruptcy may have to wait years to receive any kind of compensation.
Once the trust is established and a distribution plan is formed, then a victim can file a claim against the trust. To qualify, the claimant must meet certain exposure and medical requirements. These requirements vary from trust to trust.
If the victim does qualify, the trust will offer a settlement. The claimant can then choose to accept the settlement, or try to negotiate a larger amount. If the negotiation fails, there are some instances where mediation, arbitration or even a jury must help the claim settle.
How much each claimant receives from the trust depends on a large number of factors:
- How much funding the trust received from the bankruptcy.
- What type of asbestos related disease the victim has. Typically, malignant (cancer) diseases, such as mesothelioma, receive a higher settlement than non-malignant diseases.
- How many claimants there are and how many are anticipated in the future.
Here is an example to demonstrate how a settlement offer might be reached:
A claimant meets the qualifications, and according to the distribution plan, his mesothelioma qualifies him for the highest compensation allowed by the plan: a claim valued at $500,000. However, the plan’s funds are limited because there are a large number of current claimants and more are expected in the future. Because of this, the plan’s rules only allow 10% of the value of the claim to actually be paid. The claimant would then only receive a $50,000 settlement offer.
Seek the Representation of An Experienced Bankruptcy Trust Lawyer
SEGLaw’s bankruptcy trust department has a staff of highly skilled and experienced Asbestos Bankruptcy Trust Lawyers. This team has experience in representing clients who are seeking financial compensation from a bankruptcy trust. Since most asbestos lawsuits typically name more than one defendant, and some of those defendants may be in bankruptcy and some may not, we work closely with your SEG Law mesothelioma trial attorney to make certain your rights to financial compensation are fully realized. (Actual outcome depends on the details of your case.)
To learn more about the compensation you may be eligible for, contact SEGLaw today for a free bankruptcy trust consultation.