What Are Asbestos Bankruptcy Trusts and How Do They Affect Compensation?

If you or a loved one is pursuing legal action after being diagnosed with mesothelioma, you have probably heard about asbestos bankruptcy trusts. You may even have seen TV commercials promising “billions of dollars” in available funds, which make it seem like all of that money is potentially available to you. The reality, however, is that these ads are misleading, leaving many clients to wonder, “What exactly are bankruptcy trusts and how do they work in practice?” 

Quick Answer: What Are Asbestos Bankruptcy Trusts?

Asbestos bankruptcy trusts are compensation funds created when companies responsible for asbestos exposure file for bankruptcy. Courts require these companies to establish trust funds so that people diagnosed with mesothelioma or other asbestos-related diseases can still receive financial compensation, even if the original manufacturer no longer exists.

What Is An Asbestos Bankruptcy Trust?

After the health consequences of asbestos exposure became clear, manufacturers of asbestos-containing products faced an enormous number of legal claims from workers and others who developed mesothelioma and other asbestos-related diseases. The sheer volume of lawsuits and the amount of compensation demanded were so overwhelming that many of these companies ultimately filed for bankruptcy.

Rather than simply walking away from their obligations, however, these companies were required by the bankruptcy court to establish dedicated trust funds to ensure that people diagnosed with asbestos-related diseases today—and in the future—can still receive some form of compensation, even though the companies that made the products no longer exist as viable defendants. 

It is important to note that most of the established asbestos bankruptcy trusts only cover exposures that occurred before December 31, 1982. 

How Does An Asbestos Bankruptcy Trust Claim Work?

Bankruptcy trust claims, also referred to as mesothelioma trust fund claims, allow victims to seek compensation from companies that manufactured or sold  asbestos-containing products and have since entered bankruptcy. Each trust operates according to its own set of rules and parameters, but most follow a similar process. To qualify for compensation under the trust, claimants must show:

• a diagnosis of mesothelioma or other asbestos-related disease 
• evidence of exposure to that specific manufacturer’s product 
• documentation linking the exposure to the individual’s work history or job sites
  (a mesothelioma claim generally only requires one day of working with or around that company’s product) 

Exposure can be proved in several ways: through a signed affidavit, deposition testimony where you describe working with the product, or by proving that you worked at a job site that has been pre-approved by the trust as a known location where their products were used.

It is important to understand that, unlike lawsuits, which are litigated in court, bankruptcy trust claims are administrative claims. They are reviewed by the trust based on documentation submitted by the claimant and their legal team and are generally non-negotiable.

Why Are Asbestos Trust Fund Payouts Smaller Than Expected?

This is the question we hear most often from clients. The answer lies in the fact that asbestos  bankruptcy trusts are required by law to preserve funds for future claimants, including those who have not yet been diagnosed. Due to the long latency periods of asbestos-related diseases, someone exposed in the 1960s or 1970s may not be diagnosed until today, or even years from now, which is why these trusts are designed to last for generations of claimants. 

Percentage Payments

At the time the trust is created, experts estimate the value of a “typical” mesothelioma claim for that particular company. For example, the trust might determine that a “typical” mesothelioma claim has an estimated value of $100,000. However, if the trust paid every claimant the full value of the claim, the fund would quickly run out of money. 

To ensure that doesn’t happen, trusts apply what’s called a payment percentage, often somewhere between 10% and 30%, depending on the trust’s financial health and the number of expected future claims. This percentage reflects how much of the estimated value the trust can afford to pay while still ensuring funds remain available for future victims. The payment percentage is set by the trust and applies to everyone equally. For instance:

• Estimated value of a claim: $100,000
• Calculated payment percentage: 10%
• Actual payment to a victim: $10,000

Payment Adjustments

Payment percentages vary from trust to trust and can also change over time based on the trust’s financial projections and the number of expected claims. Trusts are required to reassess their payment percentages every three years. If a trust determines it can pay more, it will increase future payments and often send supplemental checks to those who already received less. On the other hand, if a trust’s financial position worsens, payment percentages can drop: some trusts that once paid at 80% now pay closer to 30%.

Multiple Trusts

It’s also important to keep in mind that, because many victims were exposed to asbestos products made by several manufacturers, it’s common for a single case to involve multiple bankruptcy trusts. Therefore, instead of one larger payment, a claimant could receive several smaller payments from different trusts over time. These payments may arrive months or sometimes years apart, depending on the individual trust’s review process.

In mesothelioma bankruptcy trust claims, unlike in litigation, there is generally no way to negotiate for more. This is understandably frustrating for victims, especially after seeing the commercials that deceptively promise access to seemingly endless funds.

Why Is It Taking So Long?

Another important reality is that trust claims don’t always resolve quickly. Well-established trusts like Johns Manville, for example, have been operating for decades and often process claims within a few months, while others take months or even years to pay out. The timeline can vary significantly because the trust may:

• review claims on a first-in, first-out basis
• request additional documentation
• conduct random audits to verify claims

While these steps can slow the process, they are designed to ensure the trust remains financially stable and pays legitimate claims fairly. We know this is hard to hear, especially when you’re dealing with a serious illness and financial pressures at the same time. Our team stays in close contact with these trusts and keeps you informed of where your claim stands.

 Bankruptcy Trusts & Litigation: Two Roads to Compensation

In many mesothelioma cases, there are two avenues to financial compensation: bankruptcy trust claims and litigation. 

Asbestos bankruptcy trust claims involve no courtroom, no jury, and no negotiation. You submit a claim that meets the trust’s criteria, and if approved, you receive the established payment.

Litigation against solvent companies involves a more active legal process and can result in significantly larger settlements or jury awards, because damages aren’t capped. 

These two tracks often work together. A mesothelioma victim or their family can pursue trust claims related to bankrupt manufacturers while at the same time bringing a lawsuit against other companies responsible for their asbestos exposure.

Contact An Experienced Mesothelioma Attorney For Help

If you or a loved one has been diagnosed with mesothelioma, contact us to determine the best course of action for you and your family, whether it’s through trust claims or litigation or both. We will examine every angle of your case, pursue every avenue available to you, and walk you through each step in plain language so you always know where things stand.

If you have further questions about asbestos bankruptcy trusts or anything else related to your mesothelioma claim, please reach out to our team. We’re here to help.

FAQ

What is an asbestos bankruptcy trust?

An asbestos bankruptcy trust is a compensation fund created when a company responsible for asbestos exposure files for bankruptcy. These trusts pay claims to people diagnosed with mesothelioma and other asbestos-related diseases.

How much do mesothelioma trust funds pay?

The amount paid by a mesothelioma bankruptcy trust varies depending on the trust and the claimant’s exposure history. Each trust assigns a value to a mesothelioma claim and then applies a payment percentage—often between 10% and 30%—to preserve funds for future claimants. As a result, individual payments may range from several thousand dollars to tens of thousands of dollars per trust, and are set by the trust.

How many asbestos bankruptcy trusts exist?

There are currently more than 60 asbestos bankruptcy trusts that have been established in the United States.

Why are trust payments smaller than expected?

Trusts apply a payment percentage to preserve funds for future victims. Because asbestos diseases can take decades to appear, trusts must ensure compensation remains available for future claimants.

Can I file claims with more than one asbestos trust?

Yes. Many workers were exposed to asbestos products from several manufacturers, so a single case may involve claims with multiple trusts.

Can I still file a lawsuit if I receive trust compensation?

Yes. Trust claims and lawsuits are separate. A person may pursue trust claims against bankrupt companies while filing lawsuits against companies that can still be sued.