Asbestos Trust Funds

What Are Asbestos Trust Funds?

Asbestos trust funds — also called mesothelioma trust funds — are created when at-fault companies file for Chapter 11 bankruptcy protection.

These funds are set aside to compensate victims of asbestos exposure who have developed mesothelioma and other asbestos diseases for which the bankrupt company can be proven liable.

Johns-Manville Corporation created the first mesothelioma trust fund in 1998 after it was faced with a surge of litigation related to the company’s longtime use and manufacturing of asbestos.

The Manville Trust was funded with $2.5 billion. Since then, dozens of other companies have established trust funds to compensate victims.

Due to a large number of claimants, trusts only pay a percentage of the settlement value of each claim to ensure enough money is available for all future victims. Trusts review their payment percentage every few years to adjust for market fluctuations.

The amount of compensation a claimant receives from a trust can vary based on several factors, including:

• The number of claimants to the trust
• The claimant’s disease level and degree of disability
• The number of dependants
• The financial impact of the diagnosis  

Eligibility & Requirements

To receive compensation from a trust, claimants must first prove their eligibility. This process requires extensive documentation, which many claimants need assistance to provide.

Most trusts divide eligibility criteria into two main types: medical and exposure.

Those eligible for compensation from a trust come from many walks of life. Claimants may have been former employees of asbestos companies or their spouses, contractors who installed asbestos-containing products, or people who lived and worked in or near asbestos-rich environments. 

Who Is Eligible?

First and foremost, claimants must have been exposed to asbestos by one of the legal entities for which the trust is responsible and have developed and been diagnosed with an asbestos-related illness as a result of that exposure.

Precisely which illnesses qualify for compensation can vary depending on the trust. Most trusts recognize up to seven or eight scheduled conditions — although some recognize more — as laid out in their individual trust distribution procedures (TDP).

Common examples include:

• Mesothelioma
• Lung cancer
• Other cancers
• Asbestosis
• Pleural disease
• Other asbestos-related diseases

Family Members

In certain situations, the family members of victims may find that they need to apply to a trust. Family members may apply on their own behalf or on behalf of a deceased loved one.

Secondary asbestos exposure can make the family members of asbestos workers sick over time. For example, the wife of an asbestos-product factory worker might regularly come into contact with asbestos while laundering her spouse’s work clothes. 

Spouses, children, and other household members are all at risk of secondary exposure and may need to file a claim against a trust on their own behalf.

In other cases, a family member may need to file a claim on behalf of a deceased loved one. Most trusts provide specific guidelines for this process within the TDP. A victim’s death does not negate the right of their living heirs to be granted compensation.

Proving Asbestos Exposure

Proving asbestos exposure requires thorough documentation. Claimants must accurately show when, where, how, and for what duration they were exposed to asbestos.

Documents frequently used to prove exposure include:

• Military service records
• Employment records
• Insurance records
• Paystubs
• Witness statements
• Business sale and purchase records

Statute of Limitations

Each state has passed laws limiting how long a claimant has to file for compensation following a diagnosis. A trust claim must be filed within this statute of limitations, typically between two to three years after a diagnosis.

Patients who did not make their initial claim within the statute of limitations and are later diagnosed with a different scheduled illness have their claims clock reset for the new disease. 

For example, suppose a claimant with asbestosis who applied for compensation after the statute of limitations has passed is later diagnosed with mesothelioma.

In that case, the statute of limitations is reset to the day the new diagnosis is made, and the claimant can file a new claim.

Some additional factors that can impact a claimant’s ability to receive compensation include:

• State laws: Each state has regulations regarding asbestos litigation and how trust fund payments can impact future lawsuit compensation.
• Setoffs: Some states, including New York, Texas, and Illinois, allow defendant companies to deduct the amount of a trust fund settlement from a court award.
• Restrictions on multiple claims and lawsuits: In some states, claimants can file trust fund claims and asbestos lawsuits simultaneously. Some states require claimants to disclose information about other asbestos-related claims filed in the past.
• Required information sharing: Some courts require claimants to disclose trust claims submitted during a lawsuit discovery phase.

An experienced mesothelioma lawyer can be indispensable when navigating these complex demands on a tight timeline. 

How to File a Claim

The exact process for filing a claim can vary depending on the trust and the guidelines laid out in its TDP. However, there are many commonalities between them.

Most trusts now allow claimants to file online through their website or send hardcopy documents through mail.

Step 1: Meet Criteria & Eligibility

Each mesothelioma trust fund established criteria that claimants must meet for a successful claim. The trusts specify the information on their websites. Some of the standard criteria include:

• Proof of an asbestos-related disease
• Information about where the asbestos exposure took place
• Information about when the exposure took place
• Evidence or information describing the asbestos-containing products

Claimants must submit their information within the statute of limitations (typically two to three years following a diagnosis), or the trust will not consider the claim.

Step 2: Gather Evidence to Support the Claim

Claimants and their attorneys work together to uncover all the necessary information to file the claim.

Evidence to support the claim includes:

• Medical records, including pathology reports, physician’s notes, imaging scans, and other diagnostic test results.
• A statement from a licensed and qualified physician confirming the diagnosis.
• Information connecting the claimant to the exposure sites, including employment records, witness statements, and paycheck stubs.
• Documentation explaining how the asbestos exposure contributed to the claimant’s disease.

If the trust finds incomplete or missing information, claimants must track down the proper evidence. Qualified mesothelioma attorneys may be able to help claimants locate the necessary documentation.

Step 3: Submit the Claim

Next, claimants submit the documentation to the trust for review. Some trusts accept information submitted online, and others prefer claimants to provide it through the mail. 

Most trust websites now offer convenient bulk upload tools for the large quantities of digital documents necessary for a successful claim. Claimants can also often track the status of a digital claim through their account on the trust website.

An experienced attorney can best determine how to submit the documents.

Step 4: Claim Review & Settlement

Trust administrators review the claim to decide if the case meets the trust criteria. Trust fund claims are generally processed using one of two standard review procedures: expedited or individual.

Both types of review have benefits and drawbacks. A skilled attorney can also help mesothelioma victims determine which review type may best suit their situation.

Once the review is complete, a successful claim is paid — or liquidated — while an unsuccessful claim is denied. In some cases, claimants can resubmit an unsuccessful claim for consideration if the deficiencies can be remedied.

Importance of an Attorney

The claims process is complex, and while it’s possible to tackle it independently, seeking expert help can have many benefits, not the least of which is the time, space, and peace of mind needed to focus on the health of yourself and your loved ones.

Legal professionals who specialize in mesothelioma and asbestos litigation may be able to help eligible claimants maximize their compensation by recovering funds from multiple trusts.

An experienced attorney can also help gather the necessary documentation for a successful claim. They know where to find the most compelling proof to help claims proceed smoothly toward liquidation within the statute of limitations.

Types of Trust Fund Claims

Most trusts offer claimants the option of at least two review processes: expedited and individual. Some trusts also offer additional review options, which may better suit the claimant’s circumstances. 

In most cases, trusts handle claims on a first-in, first-out (FIFO) basis, with expedited review claims taking precedence over individual review claims received the same day.

Individual Review

In an individual review (IR), trust administrators look at specific case factors, including the number of dependents and the extent of the disease.

Because the trustees must review all case circumstances in detail to determine the award amount, individual review takes longer than expedited review. It may result in a higher or lower settlement value than the scheduled value.

Claimants with specific diagnoses or in certain situations may be required to undergo individual review. For example, some types of lung cancer may not be eligible for expedited review. Trusts will also frequently handle all secondary exposure claims as IR claims.

Expedited Review

Expedited review (ER) claims are the fastest and most straightforward way to receive compensation from a trust. This review process is best for those who need compensation quickly to meet pressing medical or living expenses.

ER claims are grouped with similar cases based on the diagnosis, which allows an administrator to liquidate the cases quickly. Claimants receive a fixed payment amount; expedited reviews are processed more quickly than individual reviews.

Frequently, in trusts that offer the exigent claim option, all living mesothelioma claimants who file for expedited review are treated as exigent claims and are moved to the head of the FIFO queue.

Variables for Different Trust Fund Claims

Some trusts offer additional claim options, but which they offer — if any — varies by trust, and these avenues may not be available in every case.

Generally, trusts offer these alternate review processes to handle specific cases requiring special consideration:

• Exigent Claims: Claimants who file exigent claims do so because they are experiencing severe financial or medical hardship resulting from their diagnosis. To meet this urgent need, exigent claims are moved to the head of the FIFO queue. 
• Extraordinary Claims: Claimants filing extraordinary claims must show that their asbestos exposure was solely the fault of a single company and that it occurred for a sustained period. All extraordinary claims are reviewed individually, and a successful extraordinary claim often yields a much higher payout than any other type.
• Secondary Claims: Family members of asbestos workers who became ill as a result of secondary exposure may be able to file for this particular type of individual review.
• Foreign Claims: Some international companies may have claims from multiple countries. Those affected by their negligence may not be U.S. citizens and may not have access to many of the standard documents required by expedited review.

Compensation Amounts

The purpose of asbestos trusts is to compensate all asbestos-exposure victims for whom the establishing company has legal responsibility. But how much is a claim worth?

How Payouts Are Calculated

The level of trust fund compensation depends on several factors, including the victim’s disease and the exposure site. The most severe conditions, including mesothelioma and asbestos-related lung cancers, usually receive compensation in the five- to six-figure range.

In addition to the extent of the disease and its impact on the patient, settlement amounts depend on the trust’s funding level. All asbestos trusts only pay a percentage of the settlement value to ensure enough money for all current and future claimants. 

Qualifying for Multiple Trusts

The average claimant can receive compensation from five or more asbestos trust funds.

Because asbestos was so widely used, most people in high-risk professions were regularly exposed to multiple asbestos-containing products, each of which may have been made by a different manufacturer.

For example, someone who worked as an insulator for over a decade likely used multiple brands and forms of asbestos-containing insulation. If regular use can be proven, each brand could represent a separate claim to a distinct trust.

Example Trust Fund Settlement

Below, you can see an example trust fund settlement where a power plant worker and merchant marine machinist mate was awarded compensation from 23 different asbestos trust funds.

Example Trust Fund Settlement	Compensation
1. Owens Corning Fiberglass	$39,735
2. Foster Wheeler Energy Co.	$35,000
3. Celotex	$12,127
4. H.K. Porter	$960
5. Johns-Manville Corp	$17,850
6. Shook & Fletcher Insulation Co.	$9,400
7. Plibrico Company	$6,268
8. Owens-Illinois Inc.	$200,000
9. A.P. Green Industries Inc.	$6,190
10. UNARCO	$8,184
11. Raytech	$1,330
12. Eagle-Pitcher	$22,420
13. Keene Corp	$1,000
14. Quigley Company	$45,533
15. Fiberboard Corporation	$19,335
16. Worthington Trust	$71,415
17. Buffalo Pumps, Inc.	$175,000
18. Babcock & Wilcox	$8,500
19. Combustion Engineering	$15,000
20. General Electric Company	$100,000
21. Viacom, Inc.	$120,000
22. Motors Liquidation Company Trust	$19,191
23. Crown Cork & Seal Company, Inc.	$90,000
Total Compensation Awarded	$1,024,438

Top Asbestos Trust Funds

Although there are roughly 60 asbestos trusts, a select few have more funding and a wider reach, primarily due to the size of the companies and the number of injured workers.

U.S. Gypsum Asbestos (USG) Personal Injury Settlement Trust

USG is the largest manufacturer of gypsum-based products, including drywall, in North America. The company used and sold asbestos-containing products through 1978.

The USG asbestos trust was initially funded with about $4 billion and currently pays 12.7% of the scheduled value. The average settlement amount for the USG asbestos trust is $38,750.

Pittsburgh Corning Corporation (PCC) Asbestos Personal Injury Trust

With $3.5 billion in initial assets, the PCC trust is considered one of the largest asbestos trusts in the country.

The Pittsburgh Corning asbestos trust was created in 2016 and incorporated Unibestos and PPG Industries claims. It currently pays 24.5%, and the average payout is $52,675.

Owens Corning/Fibreboard (OCF) Asbestos Personal Injury Trust

The Owens Corning Fibreboard Trust was formed in 2006 to resolve claims with Owens Corning and its subsidiary Fibreboard, which produced home insulation, fiberglass, and other asbestos-containing products.

The initial trust funding was $3.4 billion. Owens Corning currently pays 5.9%, and Fibreboard pays 4.4%. The average payout amount for the Owens Corning asbestos trust is $23,865.

WR Grace and Co. (WRG) Asbestos Personal Injury Trust

W.R. Grace and Co., which manufactured and sold asbestos-containing insulation, cement, and acoustic materials, filed for bankruptcy in 2001, facing more than 129,000 asbestos personal injury claims.

The W.R. Grace asbestos trust was launched in 2011. It started with about $3 billion and currently pays 31.7%. The company is also responsible for an asbestos Superfund Site in Libby, Montana. The average payout for the W.R. Grace asbestos trust is $46,800.

Full List of Asbestos Trust Funds

Many claimants were exposed to asbestos at multiple worksites, so they can file claims against multiple trusts. The U.S. bankruptcy code does not cap the number of trusts for individual filings, and the average claimant can receive compensation from five or more asbestos trust funds. 

The following list represents the most common asbestos trust funds from which mesothelioma patients and their families receive compensation:

A-Best Products	Amt. in Trust: $18 million, Created: 2004, Asbestos Trust Name: A-Best Asbestos Settlement Trust
A.P. Green Industries	Amt. in Trust: $333 million, Created: 2014, Asbestos Trust Name: APG Asbestos Trust
A.B.B. Global Inc.	Amt. in Trust: $38 million, Created: 2006, Asbestos Trust Name: Lummus 524(g) Asbestos Personal Injury Trust
ACandS, Inc.	Amt. in Trust: $528 million, Created: 2008, Asbestos Trust Name: ACandS Asbestos Settlement Trust
API Inc.	Amt. in Trust: $94 million, Created: 2006, Asbestos Trust Name: API Inc. Asbestos Settlement Trust
Armstrong World Industries	Amt. in Trust: $2.1 billion, Created: 2002, Asbestos Trust Name: Armstrong World Industries Inc. Asbestos Personal Injury Settlement Trust
ARTRA Group, Inc.	Amt. in Trust: $74 million, Created: 2007, Asbestos Trust Name: ARTRA 524(g) Asbestos Trust
ASARCO	Amt. in Trust: $830 million, Created: 2009, Asbestos Trust Name: ASARCO LLC Asbestos Personal Injury Settlement Trust
National Gypsum Company (Asbestos Claims Management Corporation)	Amt. in Trust: $446 million, Created: 1993, Asbestos Trust Name: NGC Bodily Injury Trust
Babcock & Wilcox Company	Amt. in Trust: $1.85 billion, Created: 2007, Asbestos Trust Name: Babcock & Wilcox Asbestos Trust
Bondex	Amt. in Trust: $797.5 million, Created: 2016, Asbestos Trust Name: Bondex Trust
Burns & Roe Enterprises, Inc.	Amt. in Trust: $172 million, Created: 2009, Asbestos Trust Name: Burns & Roe Asbestos Personal Injury Settlement Trust
C.E. Thurston & Sons	Amt. in Trust: $53 million, Created: 2006, Asbestos Trust Name: C.E. Thurston & Sons, Inc. Asbestos Trust
Celotex Corporation (Carey Canada, Inc.)	Amt. in Trust: $1.25 billion, Created: 1997, Asbestos Trust Name: Celotex Asbestos Settlement Trust
Combustion Engineering	Amt. in Trust: $1.24 billion, Created: 2006, Asbestos Trust Name: Combustion Engineering 524(g) Asbestos Personal Injury Trust
Congoleum Corporation	Amt. in Trust: $270 million, Created: 2010, Asbestos Trust Name: Congoleum Plan Trust
DII Industries, LLC (Dresser Industries)	Amt. in Trust: $2.51 billion, Created: 2005, Asbestos Trust Name: DII Industries, LLC Asbestos Personal Injury Trust
Eagle-Picher Corporation	Amt. in Trust: $730 million, Created: 1996, Asbestos Trust Name: Eagle-Picher Industries Personal Injury Settlement Trust
EJ Bartells Co., Inc.	Amt. in Trust: $20 million, Created: 2001, Asbestos Trust Name: Bartells Asbestos Settlement Trust
Federal Mogul Corp.	Amt. in Trust: $1.85 billion, Created: 2007, Asbestos Trust Name: Federal Mogul U.S. Asbestos Personal Injury
Flintkote Co. (Flintkote Mines Ltd.)	Amt. in Trust: $214 million, Created: 2015, Asbestos Trust Name: Flintkote Company and Flintkote Mines Limited Asbestos Personal Injury Trust
General Motors	Amt. in Trust: $625 million, Created: 2012, Asbestos Trust Name: MLC Asbestos Personal Injury Trust
G-I Holdings	Amt. in Trust: $770 million, Created: 2009, Asbestos Trust Name: G-1 Asbestos Settlement Trust
Hercules Chemical	Amt. in Trust: $8.6 million, Created: 2011, Asbestos Trust Name: Hercules Chemical Company, Inc. Asbestos Settlement Trust
H.K. Porter, Inc.	Amt. in Trust: Not Applicable, Created: 1998, Asbestos Trust Name: H.K Porter Asbestos Trust
J.T. Thorpe (C.D. Cal.)	Amt. in Trust: $154 million, Created: 2006, Asbestos Trust Name: J.T. Thorpe Settlement Trust
J.T. Thorpe (S.D. Tex.)	Amt. in Trust: $232 million, Created: 2004, Asbestos Trust Name: J.T. Thorpe Company Successor Trust
Johns-Manville Corp. (Philadelphia Asbestos Corp. [Pacor])	Amt. in Trust: $2.5 billion, Created: 1988, Asbestos Trust Name: Manville Personal Injury Settlement Trust
Kaiser Aluminum Corp.	Amt. in Trust: $1.2 billion, Created: 2006, Asbestos Trust Name: Kaiser Asbestos Personal Injury Trust
Keene Corp.	Amt. in Trust: $45 million, Created: 1996, Asbestos Trust Name: Keene Creditors Trust
Kentile	Amt. in Trust: $193 million, Created: 2015, Asbestos Trust Name: Metex Asbestos Personal Injury Trust
Leslie Controls	Amt. in Trust: Not Applicable, Created: 2011, Asbestos Trust Name: Leslie Controls, Inc. Asbestos Personal Injury Trust
MacArthur Co. (Western Asbestos Company)	Amt. in Trust: $2 billion, Created: 2004, Asbestos Trust Name: Western Asbestos Settlement Trust
North American Refractories Co. (NARCO)	Amt. in Trust: $6.3 Billion, Created: 2013, Asbestos Trust Name: North American Refractories Company Asbestos Personal Injury Settlement Trust
Owens Corning	Amt. in Trust: $3.42 billion, Created: 2006, Asbestos Trust Name: Owens Corning Fibreboard Asbestos Personal Injury Trust – Owens Corning Subfund
Owens Corning (Fibreboard Corp.)	Amt. in Trust: $1.6 billion, Created: 2006, Asbestos Trust Name: Owens Corning Fibreboard Asbestos Personal Injury Trust
Pittsburgh Corning	Amt. in Trust: $3.5 billion, Created: 2013, Asbestos Trust Name: Pittsburgh Corning Corporation Asbestos Personal Injury Trust
Plant Insulation Company	Amt. in Trust: $242.8 million, Created: 2012, Asbestos Trust Name: Plant Insulation Company Asbestos Settlement Trust
Plibrico Co.	Amt. in Trust: $206 million, Created: 2006, Asbestos Trust Name: Plibrico Asbestos Trust
Porter-Hayden Co.	Amt. in Trust: $1 million, Created: 2006, Asbestos Trust Name: Porter Hayden Bodily Injury Trust
Quigley Co.	Amt. in Trust: $569 million, Created: 2013, Asbestos Trust Name: Quigley Company, Inc. Asbestos Personal Injury Trust
Raymark Corp. (Raytech Corp.)	Amt. in Trust: Not Applicable, Created: 2000, Asbestos Trust Name: Raytech Corporation Asbestos Personal Injury Settlement Trust
Shook & Fletcher Insulation Co.	Amt. in Trust: $109 million, Created: 2002, Asbestos Trust Name: Shook & Fletcher Asbestos Settlement Trust
T. H. Agriculture & Nutrition (THAN)	Amt. in Trust: $901 million, Created: 2009, Asbestos Trust Name: T. H. Agriculture & Nutrition, LLC Asbestos Personal Injury Trust
Thorpe Insulation Co. (Pacific Insulation Co.)	Amt. in Trust: $389 million, Created: 2006, Asbestos Trust Name: Thorpe Insulation Company Asbestos Personal Injury Settlement Trust
Turner & Newall	Amt. in Trust: $635 million, Created: 2007, Asbestos Trust Name: Federal-Mogul Asbestos Personal Injury Trust – Turner & Newall Subfund
United Gilsonite Laboratories	Amt. in Trust: $TBD, Created: TBD, Asbestos Trust Name: United Gilsonite Laboratories Asbestos Personal Injury Trust
United States Gypsum Co. (USG Corp.)	Amt. in Trust: $3.96 billion, Created: 2006, Asbestos Trust Name: United States Gypsum Asbestos Personal Injury Settlement Trust
United States Mineral Products	Amt. in Trust: $8 million, Created: 2005, Asbestos Trust Name: United States Mineral Products Company Asbestos Personal Injury Settlement Trust
UNR Industries, Inc. (Unarco Industries, Inc.)	Amt. in Trust: Not Applicable, Created: 1990, Asbestos Trust Name: UNR Asbestos-Disease Claims Trust
W.R. Grace & Co.	Amt. in Trust: $3 billion, Created: 2014, Asbestos Trust Name: WRG Asbestos Personal Injury Trust
Yarway	Amt. in Trust: $325 million, Created: 2016, Asbestos Trust Name: Yarway Asbestos Personal Injury Trust

Why Trusts Were Created 

As more and more victims of asbestos exposure began seeking compensation through the courts, companies that were unable to handle the financial strain filed for Chapter 11 reorganization bankruptcy as a way of eliminating their financial liabilities.

Under section 524(g) of the federal bankruptcy code, the court system required companies that faced asbestos liability to create trust funds to pay current and future claimants as part of the process to emerge from bankruptcy.

Trust funds are managed by court-appointed boards of trustees, which oversee day-to-day operations and money management.

The trustees base compensation amounts on payment schedules, which detail the financial awards based on the disease severity. Payment schedules are determined during the bankruptcy proceedings.

Section 524(g) of the Bankruptcy Code & Its Impact on Compensation

The Section 524(g) amendment to the bankruptcy code was enacted in 1994 to address nationwide concerns about how at-fault companies in Chapter 11 bankruptcy should handle current and future liabilities. 

This section allows for the creation of an asbestos trust fund to manage and settle all current and future asbestos claims. It also includes a channeling injunction that directs all future claims to the trust.

Section 524(g) was most recently updated in 2022 to enhance and formalize the representation of future claimants during the trust’s formation, clarifying the responsibilities and duties of the Future Claims Representative.

Bankruptcy and History of Asbestos Lawsuits

Scientists and healthcare professionals have acknowledged the dangers of asbestos for centuries. But those who stood to profit the most from asbestos use, like business owners, concealed and denied the risks to ensure they would not face any liabilities from sick workers. 

By the 1960s, injured workers realized their deadly illnesses resulted from asbestos exposure in the workplace or by contact with asbestos-containing products.

Early on, injured workers did not sue the at-fault companies. Instead, they filed claims through state workers’ compensation programs, but most were denied. Officials said asbestos diseases, like mesothelioma, were not traumatic injuries because they develop slowly, so the claims were not eligible for workers’ comp.

With no relief in sight, workers turned to the court system. Asbestos litigation became a significant legal concern in the 1970s. Large groups of sick and injured workers filed class action lawsuits against asbestos manufacturers. 

As more people fell ill, asbestos companies began to struggle with their legal liabilities, even though many of them could partially cover the costs of the lawsuits through insurance. Johns-Manville was the first asbestos manufacturer to file for bankruptcy in 1982 due to this increased legal pressure.

The Manville Personal Injury Settlement Trust began accepting claims in 1987, but misestimating the number of claims it would receive meant it started to run out of money as soon as 1990. 

The Manville Trust then entered another round of litigation and reorganization, much of which would establish precedents still in use today, such as the development of the concept of the TDP or trust distribution procedures and the establishment in 1994 of the Section 524(g) amendment to the bankruptcy code. 

As the new millennium began, more companies followed in Johns-Manville’s footsteps, filing for Chapter 11 bankruptcy and forming asbestos trusts to discharge their liabilities to their victims.

Today, there are over 60 active asbestos trust funds. These trusts are managed by court-appointed trustees whose duty is to ensure that funds remain sufficient to compensate all current and future eligible claimants.

How a Trust is Formed

Asbestos trusts are formed under the supervision of the federal bankruptcy courts as part of the process for at-fault companies to emerge from Chapter 11 bankruptcy. Once a company enters Chapter 11, all outstanding debts and collection efforts are put on hold. 

For companies with many active mesothelioma and asbestos lawsuits, Chapter 11 bankruptcy is a convenient shelter, at least temporarily, from their significant liabilities. 

Step 1: Plan Submission

Companies undergoing Chapter 11 bankruptcy proceedings can only emerge by filing a plan to discharge some, if not all, of their debts. 

For companies with significant asbestos liabilities, this plan must provide for the formation of a trust to compensate victims of negligence. The trust distribution procedures are proposed for review by the court. 

Step 2: Estimation of Funds

Different trusts are funded with varying amounts of money. How much money a trust is funded with is determined during bankruptcy proceedings by estimating the projected total funds necessary to discharge the company’s liability toward all of its victims.   

Step 3: Court Approval

The plan, including trust formation, must be approved by a two-thirds majority of the company’s creditors. The trust plan, in particular, must receive a 75% vote from all current claimants whose claims will be addressed by the trust. 

Creditors are allowed to question a company representative under oath about the plan and the current state of the business. Creditors can ask for revisions to the plan if they find it unsatisfactory or insufficient.  

Once the court approves the plan, all previous debts are considered discharged, and the company is now responsible only for those debts approved by the court and the creditors in the plan.

Step 4: Trustee Appointment & Management

The court appoints trustees to manage the trust after establishment, selecting individuals they believe will manage the funds responsibly. Asbestos trusts are separate entities from the companies that form them and are managed independently. 

The trustees manage the trust so that enough funds remain to compensate all eligible claimants. They are responsible for setting the maximum annual payment and making any necessary changes to the payment percentage.

Difference Between Lawsuits & Trust Fund Claims

Trust fund claims and mesothelioma lawsuits both have pros and cons and may not be mutually exclusive.

Trust Fund Claims	Mesothelioma Lawsuits
Trust fund claims are filed against specific companies and require the claimants to meet eligibility standards.	Asbestos lawsuits are filed against asbestos product manufacturers for wrongful exposure or wrongful death.
They are resolved quickly, usually within 90 days.	It can take years to resolve, particularly if either party appeals the decision.
Compensation has a capped maximum value and is subject to the trust fund payment percentage.	Compensation has no maximum or minimum value.
Claimants who can prove eligibility up to trust standards are guaranteed funds.	Funds are awarded to the plaintiff based on the judge’s and jury’s will.

Deciding which option is right for you takes time, consideration, and expertise. In some situations, victims file both trust fund claims and asbestos lawsuits.

No matter which path to compensation is taken, prospective claimants or plaintiffs can benefit from expert legal advice when making this critical choice.

Regulations Impacting Asbestos Trust Payments

The final variety of asbestos still in use in the U.S. — chrysotile or white asbestos — was only banned in early 2024, and companies using it have 12 years to phase it out. Many other types of asbestos remain in public and private structures nationwide.

The persistent presence of asbestos in environments where people live, work, and study means that asbestos litigation will remain an essential part of the legal landscape for decades to come. As plaintiffs’ needs change, new rules, regulations, and precedents will continue to be established. 

FACT Act and Tort Reform

In 2015, federal lawmakers proposed the Furthering Asbestos Claim Transparency (FACT) Act to monitor asbestos trust funds closely. FACT proponents say the legislation would prevent “double dipping” from several trust funds. 

The FACT Act falls under tort reform, which aims to limit plaintiffs’ ability to bring litigation surrounding civil wrongdoing that has caused loss or harm or to limit the compensation they can recover.

Under the legislation, trusts would make claims and payout information available to the public. It would also require asbestos victims to make public their personal information, including name, work history, and Social Security number. The FACT Act stalled in the legislature in 2017.

Department of Justice

In 2018, the U.S. Department of Justice (DOJ) increased its monitoring of asbestos trusts to address the “problematic lack of transparency in the operation and oversight of asbestos trusts.” The increased oversight protects against fraud, mismanagement, and abuse.

In its more stringent monitoring of trust funds, the DOJ filed a statement of interest in the Kaiser Gypsum bankruptcy proceedings. DOJ officials said the proposed trust needed better transparency to prevent fraud. 

The DOJ also challenged the appointment of a trustee for the Duro Dyne asbestos trust, saying the candidate’s ties to the company posed a conflict of interest.