Legal Options

Mesothelioma Bankruptcies

Since the current wave of asbestos litigation began in the late 1970s, more than 70 companies that manufactured asbestos products have filed for bankruptcy protection. Many of these have simply gone under while others have merged or been acquired by other corporations. A few, such as W.R. Grace, are still in operation. Under the terms of their bankruptcies, many of those that have survived have been required to set up a trust fund from which to pay asbestos claims.

A typical mesothelioma lawsuit may have multiple named defendants. If you are one such claimant and your lawsuit is successful, chances are favorable that you will receive compensation through at least one such trust fund.

Protections, Obligations and Settlement Trusts

When a corporate business entity files for Chapter 11 bankruptcy, it gains protection from creditors and lawsuits while the case is under consideration. In exchange for this protection, the company must develop a plan by which its creditors and others with claims against the corporation will be paid at least part of what is owed to them. In order for the bankruptcy to become official, this plan must be submitted to a bankruptcy judge for approval.

As part of the process and restructuring of business debt, the company is obligated to set up a trust fund. This is a special type of bank account that is administered by a third party, or "trustee." During the bankruptcy procedure, the company's lawyers work with the bankruptcy court to determine how much of the company's liquid assets should be placed in this account.

For those asbestos manufacturers who have been granted Chapter 11 bankruptcy protection, this trust fund is what pays asbestos victims' claims, and the mesothelioma patient (or their lawyer) will file the claim with the trust.

In many ways, it is much easier and faster to deal with a company that has set up an asbestos settlement trust fund. Claimants do not have to file numerous legal papers with the court. Instead, they contact the trustees directly, who will determine the value of the claim and pay out accordingly.

The downside is that, like the company's other creditors, the mesothelioma claimant may receive only a small part of what they might have been owed otherwise. This applies even if a lawsuit was filed prior to the company's bankruptcy proceeding began.

Ironically, many of these companies eventually emerge from Chapter 11 and become quite profitable again - but asbestos victims are still limited to filing claims against the trust. Nonetheless, it is better than receiving nothing at all, which may be the only alternative. It should be kept in mind that since most mesothelioma claims have multiple named defendants (see above), the claimant may not have to depend on one such trust fund under those circumstances.

While filing a claim against a trust fund is less complicated than filing a lawsuit, it is always best to contact an attorney if you have not had experience with such procedures. Although the trust fund has been set up in part to protect the company, asbestos claimants have rights of which they may not be aware. In addition, claim forms may contain language that is not immediately clear to non-legal professionals. Having these forms examined by a qualified lawyer is a good way to make sure you as a mesothelioma claimant receive the compensation to which you are entitled under the terms of the bankruptcy.

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