Most companies involved in the asbestos industry have gone through bankruptcy protection. They either re-formed into a new business or shut down. Trust funds were created during bankruptcy to set aside a company’s assets to compensate people injured by their asbestos-containing products.
Satterley & Kelley, PLLC, has filed many asbestos trust fund claims for clients sickened with asbestos-related diseases. Families of those killed by these conditions can also file compensation claims. You can learn more by calling us at 855-385-9532.
What is an Asbestos Trust Fund?
An asbestos trust fund is a financial mechanism created to compensate individuals harmed by asbestos exposure. They’re a response to the massive number of lawsuits filed against makers and sellers of asbestos-containing products. The financial drain caused bankruptcies and drove many companies out of business.
What is Bankruptcy?
Bankruptcy is based on federal laws. They protect companies and individuals when their debts and obligations (including lawsuits) can’t be met. The company informs the court and those owed money of their plan to pay what they can and either close the business or continue to operate.
Why Were Asbestos Trust Funds Created?
The parties in bankruptcies usually negotiate an approach acceptable to everyone. If there are disagreements, the issue can be litigated. When ordered or approved by the judge, the plan goes into action. Asbestos-related companies didn’t create and provide assets to these funds out of the goodness of their hearts. It was a way to earn court approval of their bankruptcy plans.
How Do Asbestos Trust Funds Operate?
An asbestos trust fund may work as follows:
- Creation and Funding: The company sets up a trust fund due to bankruptcy proceedings. Trustees run the fund, not the company, to benefit asbestos victims. The company contributes money, assets, and sometimes insurance policies. This provides compensation to eligible claimants now and in the future
- Claims Process: Each trust fund has its claim criteria and procedures. Claimants must provide evidence of their asbestos exposure, resulting illness, and proof that the company’s asbestos-containing products caused it. The trust fund’s administrators review this evidence
- Evaluation and Compensation: The trust fund administrators determine the compensation amount based on their guidelines after evaluating the claim. They often consider illness severity, the claimant’s level of exposure, and other factors, including the fact they will only compensate for a certain percentage of a person’s total losses
- Compensation Payments: Once the claim is approved, the trust fund disburses compensation to the claimant. The amount can vary depending on the trust fund and the claimant’s circumstances
Each fund has its own set of rules, and the bankruptcy courts supervise them. Part of Satterley & Kelley’s job is ensuring the fund follows these rules and doesn’t shortchange our clients.
What are an Asbestos Trust Fund’s Goals?
Asbestos trust funds serve several purposes:
- Efficiency: Trust funds streamline the compensation process, making it quicker and more efficient for victims to receive compensation compared to lengthy litigation
- Preservation of Assets: By setting up trust funds specifically for compensating victims, a company’s not financially wiped out by asbestos claims, which would leave future victims without any compensation
- Fair Distribution: Trust funds aim to ensure fair compensation for eligible claimants, as the available funds are distributed based on established criteria rather than on a first-come, first-served basis
Thanks to bankruptcy plan negotiations and court oversight, the plan’s goals are a mix of protections for the company and victims of asbestos-related diseases.
Can I Sue a Company That Created an Asbestos Trust Fund?
No. It either no longer exists or is shielded from further lawsuits because of court approval of the bankruptcy plan. If a trust fund isn’t following its rules or the law, that could be brought up with the bankruptcy court overseeing it.
What are the Pros and Cons of Asbestos Trust Funds for Those Injured by Asbestos?
The main ones are:
- The process should be far simpler and faster than litigating a lawsuit against a company. You may get compensation in months instead of potentially many years, assuming the lawsuit’s successful
- What you obtain may be far less than a successful lawsuit, but you’re not dealing with the delay and stress of litigation. Trust funds will compensate you for only part of all the harm you suffered. But given the number of legal claims, something is better than nothing
Given bankruptcy laws and how courts enforce them, asbestos victims have limited options if a company has bankruptcy protection. Claimants have to do the best they can with what they have.
Call Us Today For A Free Consultation
Satterley & Kelley, PLLC, attorneys are your boots on the ground if you or someone you love in Kentucky suffers from mesothelioma or an asbestos-related illness. To schedule a free initial consultation, call our Louisville office at 855-385-9532 or complete our contact form.