Bankruptcy trusts play a big role in asbestos litigation today. These trusts are set up by companies that filed for bankruptcy because of overwhelming asbestos claims. The trusts are designed to compensate people who were exposed to asbestos and now face serious health issues like mesothelioma or lung cancer. While they offer financial relief, they also create some challenges in the legal process.
How Do Bankruptcy Trusts Work?
When companies declare bankruptcy due to asbestos liabilities, they often establish trusts to manage claims. These trusts are funded to compensate both current and future victims. For example, the Manville Trust, created by Johns Manville, has paid out billions of dollars to claimants.
To get compensation, a claimant needs to provide proof of exposure to asbestos from a specific company. This might include employment records, medical reports, or other documentation. The process is usually faster than a traditional lawsuit, but payment amounts are often limited by trust rules to ensure funds last for future claims.
Transparency Problems in Litigation
One major issue with bankruptcy trusts is the lack of transparency. Plaintiffs sometimes file claims with trusts while also suing other companies in court. This can lead to “double-dipping,” where they receive money from both the trust and a lawsuit for the same injury.
The Garlock case highlighted this problem. Evidence showed that plaintiffs concealed trust claims to increase payouts from lawsuits. This raised concerns about fairness for defendants in court cases.
To fix this, states like Ohio and Texas now have laws requiring plaintiffs to disclose trust claims during litigation. These transparency laws make it easier to divide liability fairly among all responsible parties.
Balancing Fairness and Support for Victims
Bankruptcy trusts are a lifeline for many asbestos victims, offering quicker payouts compared to lawsuits. However, they also complicate the legal process. Reforms that require disclosure of trust claims can help ensure fairness while still providing support to victims. If you or a loved one is involved in an asbestos-related claim, contact Pourciau Law Firm today to find out how we can guide you through the process.