What are asbestos bankruptcy trusts?

As the cases related to asbestos exposure diseases increased in US, it led to significant increase in compensation claims by people who suffered from various asbestos exposure related diseases such as asbestosis, mesothelioma, lung cancer etc.

What are asbestos bankruptcy trusts

These compensation liabilities were huge for certain sectors such as mining or companies dealing with producing asbestos metal and related products. The magnitude of this can be judged by the fact that through 2002 more than 700,000 people had filed for asbestos claims against more than 8,000 defendants. By 2002, defendant had paid close to $50 billion in claim settlements.

The defendants (such as miners and producers of asbestos) got worried primarily because asbestos related disease sometimes take lot many years to surface and thus these companies could expect lot of future claims which would impact and even threaten their business. To make sure their assets are secured they filed for restructuring under Section 524(g) of the U.S. Bankruptcy Code. During this process all lawsuits against the company are halted and negotiations happen after which reorganization plan is submitted to the court. This plan generally includes establishment of "asbestos personal injury trust" which then pay to the claimants. Thus in a way the claims are settled by the trust. These are also called asbestos bankruptcy trusts. Ones these are formed, these trusts than handle the claims filed against the company and not the company itself.

This method is gaining popularity. By 2011 more than 90 firms filed for reorganization and 56 trusts have been established. In 2008, these trusts were reported to have assets of more than $30 bn. More are expected to come in future.

As most of the trusts do not have sufficient funds to pay all the present and future claim liabilities, they generally pay a percentage of the amount claimed. Among the trusts presently, the average percentage is 25% (but vary from 1.1% to 100%). These trusts have been busy settling cases, the largest 26 trusts have settled more than 2.4 million cases till 2008 and have paid close to $11 bn in compensation. It should be noted that a claimant can file compensation claim with multiple trusts and can get compensation too. The average compensation per case across the trusts is $41,000.asbestos bankruptcy trusts

Asbestos claims are rising and the trusts seem not to have enough money to settle case forever. This is an area of concern for future claimants.

Names of some of the biggest active asbestos bankruptcy trusts are:

  • DII Industries, LLC Asbestos Personal Injury Trust
  • Armstrong World Industries Asbestos Personal Injury Trust
  • Manville Personal Injury Settlement Trust
  • Owens Corning Fibreboard Asbestos Personal Injury Trust
  • United States Gypsum Asbestos Personal Injury Trust
  • Western Asbestos Settlement Trust
  • Babcock and Wilcox Company Asbestos Personal Injury Trust

Filing claim with Asbestos Bankruptcy Trust

Filing claim with Asbestos Bankruptcy Trust is similar to filing a claim in a court – they require evidence. Most common documents required include:

  • medical reports stating asbestos related disease and extent to which asbestos is responsible for it (as some disease can be caused without asbestos too, e.g. lung cancer)
  • diagnosis and medical report from a physician
  • evidence that the claimant was exposed to asbestos because of the company. It maybe while working with the company or using its products etc. This may include records, bills, witnesses, etc.)

Once the claims are filed they are evaluated by the trusts. It should be noted that the trust becomes a separate entity than the company which created it and thus the company has no role in analysing the claim, processing and settling it. It is all done by the trust. When the claim are filled, many trusts will qualify them based on disease, cause, etc. and use them to arrive at the settlement.

Lawsuit or bankruptcy trust claim?

This is a difficult question to answer weather you should file a claim with the bankruptcy trust or a lawsuit in the court. In many cases people file both too. As every case is different, it should be left on the judgment of an experienced asbestos case lawyer. He would be able to guide based on the state laws and case strength on what would be best for a claimant.


If you have been diagnosed with an asbestos related diseases the first thing you need to do is to consult a good lawyer who has experience in dealing with asbestos related cases. Discuss your case with him and he would be able to guide you what would be in your best interest.