Although even into the 1980s companies that allowed asbestos exposure believed the ensuing lawsuits would not act as more than a minor irritation, it quickly became apparent this was not the reality of the situation. Since those first major asbestos manufacturer lawsuits appeared in the 1970s, more than 730,000 mesothelioma claims had been brought forth against as many as 8,400 corporate defendants by 2002. Despite big business’ optimism, congress recognized the depth of the problem early on, considering ways to fairly compensate victims.

Today, we see increasingly more companies filing for Chapter 11 bankruptcy to avoid the costs of asbestos-related suits. As a result of greater plaintiff awards and an explosion in the number of cases, many companies now turn to this form of protection that halts all litigation against the defendant and can allow for the creation of a trust to divide payment between those impacted. Unfortunately, those seeking compensation typically receive only a fraction of their expected compensation when collected from a trust fund. The creation a trust protects a company’s assets by ensuring compensatory expenses will not exceed the company’s net worth. In many cases, these companies emerge from bankruptcy fiscally stronger than before.

For defendants to successfully seek the protection of Chapter 11 bankruptcy, a 2010 Rand report explains they must meet seven conditions:
A trust for present and future asbestos claims exists

  • The trust is funded by securities or debt from the debtor.
  • The trust owns a majority of the voting stock of the debtor, of the parent company of the debtor, or of a subsidiary of the debtor.
  • The trust will pay present and future asbestos claims against the debtor.
  • The present and future claims are valued and paid in substantially the same manner.
  • The plan is approved by a 75% vote of current claimants in number and by two thirds of the voting claims in terms of claim value.
  • A future claimants’ representative (FCR), who protects the interests of claimants who have not yet filed with the trust, is appointed.

One of the first companies to file for bankruptcy, Johns-Manville Corp., did so on August 1, 1982. That bankruptcy allowed for the creation of the Manville Personal Injury Settlement trust after the July 15, 1987 approval of the reorganization confirmation. This company’s bankruptcy was in response to over 40,000 filed claims against the company. In this case, the creation of a trust fund likely was not to “fairly compensate” victims, but rather to ultimately decrease their expenses.

The creation of trusts touches on the divide between the desires of asbestos exposure sufferers and the companies that allowed for their exposure. Legislation to simplify and fairly distribute compensation has attempted to weigh the concerns of both the plaintiffs and defendants. Victims of asbestos exposure want things like adequate compensation, relaxed proof of exposure standards and sufficient trust funding. However, companies involved want stricter proof of exposure, a more efficient and predictable claims system and compensation that is limited to exposure that occurred in the workplace.

Furthermore, some states have attempted to slow the number of emerging asbestos-related lawsuits by enacting their own legislation. While apparently favoring the companies that allowed for this asbestos exposure, limiting the number of lawsuits will also help those patients with legitimate claims receive fair compensation. One of the ways states have limited the number of cases has been by barring class action suits that allow plaintiffs with lesser diseases to be put into a class action suit with patients suffering from the most devastating forms of asbestos-related disease, like mesothelioma. In addition, states have also passed legislation that speeds up mesothelioma lawsuits when the patient is in the later stages of the cancer, which combats the defense team strategy of stalling in the hopes that the plaintiffs will die and their family will not be able to collect full compensation.


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