Section 524(g) of the Bankruptcy Code permits a reorganizing company with asbestos liability to establish a trust funded to pay present and future claims, accompanied by a channeling injunction directing all such claims to the trust.
Approval requires supermajority creditor approval and appointment of a representative for future claimants.
Alternative Names:
524(g) Trust, Asbestos Bankruptcy Trust
Why it Matters?
These trusts are the resolution mechanism for companies whose asbestos liability exceeds their value, and they matter to solvent defendants for a different reason: trust claim filings by plaintiffs are discoverable evidence of alternative exposures. A claimant who filed against multiple trusts alleging exposure to their products while telling a jury the solvent defendant was the sole source presents an impeachment opportunity, which is why trust claim disclosure orders are heavily litigated.
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Frequently asked questions
Why do trust filings matter to solvent defendants?
Are trust claims discoverable?
