Bankruptcy in Mesothelioma Claims
The potential awards or settlements in asbestos-related injury claims can be substantial. But what happens if the defendant has filed for bankruptcy? Does that mean recovery is impossible? Fortunately, the answer is no, there is still a way for people hurt by exposure to asbestos to receive compensation from liable companies that have since gone into bankruptcy.
Bankruptcy Protection and Trust Funds
Defendants in asbestos-related injury claims may have (or will) file for bankruptcy through Chapter 11 of the U.S. Bankruptcy Code (hereinafter, the “Code”). Under this form of bankruptcy, the company or individual reorganizes and develops a plan to remain in business. Under §524 of the Code, if the bankruptcy plan is approved, the company is protected from lawsuit.
However, pursuant to §524(g), in order to receive this injunction from litigation, the following conditions must be met:
1. There is a trust for present and future claimants.
2. The trust is funded by securities of at least one of the debtors.
3. The trust owns a majority of the voting shares of each debtor, of the parent corporation of the debtor, or of a subsidiary of the debtor.
4. The trust will use its assets and income to pay claims.
5. The trust will value and pay similar claims in substantially the same manner.
6. The trust is approved by 75% of current claimants.
Bankruptcy in Mesothelioma Claims – Operation of Trust Funds
After funding the trust, the company has little involvement. Trustees manage the trust for the benefit of the claimants and follow preset distribution procedures. Making a claim for trust funds is similar to filing a lawsuit against the company to recover damages, though the process is simpler and usually faster. However, many of the same items must be proven, such as exposure to asbestos and the development of a disease as a result of that exposure. Additionally, as with filing a lawsuit, there are many state-specific laws that apply, so speaking to an attorney is important.
Claims are usually reviewed using either the expedited review or the individual review. Under an expedited review, the value of different diseases is set and published for claimants to view. If a claimant meets the predetermined criteria, he or she will be entitled to payment. Under an individual review, there are no set values associated with a disease. Instead, the focus is on the individual circumstances and claim amounts will vary.
If the claim is approved, it will then be liquidated. This simply means the claim will be assigned a monetary value. The actual payment amount that a claimant receives is usually a percentage of the liquidated amount. Claims are paid as a percentage of the liquidated amount in order to ensure that the trust will have enough funds to pay all future claimants.
Mesothelioma and Asbestos Attorney
If you have been diagnosed with mesothelioma or another asbestos-related disease, we can help. At the Throneberry Law Group, we travel nationwide to provide experienced representation to those in need. Please contact us today.