Bankruptcy Does Not Erase Asbestos Liability: Some Crucial Information for Victims

Asbestos is a dangerous substance that can cause serious illnesses. Among the common asbestos-related illnesses are mesothelioma, asbestosis, and lung cancer. Mesothelioma is a particularly aggressive form of cancer that develops in the mesothelium, which is the tissue that forms the layer lining internal organs. After someone is exposed to asbestos, it can take decades for mesothelioma symptoms to become apparent. Unfortunately, this means most people learn about their condition when the disease progresses. By the time someone is getting a mesothelioma diagnosis, the company responsible for the asbestos exposure may have already gone out of business and declared bankruptcy. The good news, however, is that bankruptcy does not erase a company’s asbestos liability. In such cases, victims and their families still have options for pursuing compensation.

How Does Bankruptcy Affect Asbestos Liability?

Companies can face overwhelming asbestos-related claims, especially if they are companies whose employees directly handled asbestos. Frequently, when companies find themselves in this situation, they turn to bankruptcy, specifically Chapter 11 bankruptcy. But does filing for Chapter 11 bankruptcy mean that a company is no longer liable for the harm it caused? Not at all. Chapter 11 bankruptcy, which is also called reorganization bankruptcy, simply reorganizes a company’s debts and obligations. In other words, it just changes how debts and obligations are handled. It does not erase them. So when a company that is facing asbestos-related claims files for Chapter 11 bankruptcy, it does so with the intention of managing its liabilities in a more structured way.

Asbestos Trust Funds

In cases involving companies facing asbestos-related claims, one major step in the Chapter 11 bankruptcy process is the creation of trust funds. Courts usually require companies that file for bankruptcy to open trust funds and set aside resources for individuals affected by asbestos. Affected individuals can then make claims against the trust funds and recover compensation even if the liable company is no longer operational.

Typically, independent trustees, not bankrupt companies, manage asbestos trust funds. These trustees review all claims and pay out based on specific criteria, such as disease type, exposure level, and evidence submitted. Currently, there are more than sixty active asbestos trust funds in the United States, with these trust funds setting aside billions of dollars for current and future claimants.

Steps for Seeking Compensation Through an Asbestos Trust Fund

While every claim is different, the following are the general steps for seeking compensation through an asbestos trust fund;

1. Consult an attorney to determine if you have a strong case
2. Check if the company has a trust fund.
3. Confirm if you meet the trust fund’s requirements.
4. Gather relevant evidence, including medical and employment records.
5. Build the case with the help of an attorney.
6. File the claim.
7. Wait for your claim to be reviewed and decided.

Nationwide Mesothelioma Lawyers

If you or a loved one were diagnosed with mesothelioma, contact our office to speak to one of our experienced nationwide mesothelioma attorneys about your situation. Our office can help investigate your case and determine if compensation can be sought from negligent parties to help pay for your medical treatment and help you and your family live a more comfortable life.