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What is an Asbestos Bankruptcy Trust

Most of the asbestos companies that file for bankruptcy protection do so under Chapter 11 of the Bankruptcy Code.  This allows the companies to avoid being sued in civil courts. According to federal law, when a company files for bankruptcy, all pending and future lawsuits against that company are barred during the length of the bankruptcy case.  Companies filing for Chapter 11 bankruptcy protection emerge from bankruptcy with a reorganization plan and set up an asbestos bankruptcy trust.  Once the trust is established, any person who was injured by by that company’s asbestos containing products has to file a bankruptcy claim against that company’s trust.

There is no limit to the number of trusts you can put in a claim against as long as you have evidence you were exposed to that company’s products or worked in one or more locations where their products were used.  In addition, there is no cap to the amount of recovery you can receive from bankruptcy claims. All claims are then paid from the asbestos bankruptcy trust.

In combination, the asbestos trusts have more than $30 billion set aside to pay claims brought by those who have been injured by exposure to asbestos.