Bankruptcy is a legal proceeding that allows an individual or company to reorganize or restructure its finances with the plan to rehabilitate their financial situation. Asbestos-related lawsuits have caused many companies to file for bankruptcy. More than 70 companies involved in asbestoslawsuits in the United States have filed for bankruptcy protection. Typically the company will file for Chapter 11 bankruptcy, which is a rehabilitation or reorganization of debt.
When a company files for Chapter 11 bankruptcy, it must submit a written repayment plan to the court and their creditors. This plan must be approved by the court before the bankruptcy becomes official. During the period of time that a bankruptcy is in process, all action against the company stops.
How Bankruptcy Affects a Company's Ability to Pay Compensation
During bankruptcy proceedings, all financial action against a company will halt. During this time, the court will review the submitted plan for repayment or restructuring the company's finances. After this process is complete, payments for new or existing asbestos claims will begin. As a part of the restructuring plan, creditors agree to receive less than they are owed. The benefit to the creditor is receiving some reimbursement is better than receiving nothing, which is a possibility with other types of reorganization.
What is a Settlement Trust?
Money that is designated for asbestos claims is placed in a settlement trust during bankruptcy procedures. The amount of money placed in the settlement trust is agreed to by the company during the bankruptcy procedure. Claims are paid from this settlement trust. Once a company has a settlement trust in place, the process for receiving compensation forasbestos exposure becomes different.
In cases involving a settlement trust, the claimant will file a claim with the trust. Unlike a lawsuit, the claimant will not be asked to provide expert testimony or extensive medical records. The individuals in charge of disbursing funds from the settlement trust will determine the value of the claim and then pay a percentage of the claim. As with other creditors involved with a bankruptcy case, the claimant will only receive a percentage of the amount owed. The typical amount paid by a settlement trust is between five and 15 percent.
What Can I Do to Receive Compensation from a Settlement Trust?
To receive compensation from a company that has filed bankruptcy, victims contact the company to get in touch with those handling the settlement trust. Although this seems like a relatively straightforward process, it is best to contact an attorney that has experience in these sorts of claims.
Receiving compensation from a company that has filed bankruptcy and put a settlement trust in place means victims do not have to initiate a lawsuit, but the process for filing a claim can be handled more efficiently by using an experienced attorney. A knowledgeable asbestos attorney understands the steps involved in receiving compensation from a settlement claim and will know the necessary process to get the most money available for your case.
Bankruptcy Does Not Mean Broke
It is important to realize that when a company has declared bankruptcy it does not mean the company is broke and it does not release them of financial responsibly for asbestos exposure claims. An aptly run company will file Chapter 11 bankruptcy early enough to continue business and may emerge from bankruptcy stronger than before it entered.
Filing bankruptcy does not release the company from the obligation to paysettlements filed before Chapter 11 proceedings were initiated. The claimant may end up receiving less compensation than originally expected, since Chapter 11 bankruptcy holds the company responsible for the repayment of money to all creditors, just at a reduced percentage.
Those who have a legitimate asbestos exposure claim involved with a company that has filed for bankruptcy protection should consult an attorney before filing a claim. An experienced attorney will know if a settlement trust is in place, the type of medical proof the trustee is requiring, and the most expedient method to file a claim. By using an asbestos attorney to handle the paperwork involved in the claim process, you can expect to receive the utmost compensation available under the bankruptcy guidelines.
For more information about pursuing legal action, please fill out the form on the right to receive an informative packet or give us a call at 800-615-2270. Please read Choosing an Attorney and Trial Process for more information on these topics as well.
Additional Resources
Resources available at Asbestos.com can only offer basic assistance in understanding the generalities of the mesothelioma litigation process. If you seek legal information, it is always a good idea to speak with a qualified lawyer of your choosing to ensure that you get accurate information regarding any potential claim that you might have.
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