524(g) Bankruptcy Trust

A 524(g) trust is a settlement trust established under 11 U.S.C. § 524(g) through a company's Chapter 11 bankruptcy reorganization, designed to channel all present and future mass tort liability — historically asbestos claims, and more recently other latent-injury products — into a single trust that assumes the debtor's liability in exchange for an injunction permanently channeling all related claims away from the reorganized company and its affiliates. Confirmation of a 524(g) plan requires, among other conditions, approval by at least 75% of voting claimants and appointment of a future claimants' representative to protect individuals who have been exposed but not yet manifested injury, reflecting the latency periods characteristic of asbestos and similar disease-based mass torts. Once established, a 524(g) trust operates independently of the bankruptcy court going forward, applying its own trust distribution procedures — often a grid-like schedule of disease categories and payment percentages — to process claims for decades after the underlying bankruptcy has closed. Because the channeling injunction extinguishes claims against the reorganized debtor and often against affiliated non-debtor parties who contribute funding to the trust, 524(g) resolution fundamentally changes the litigation landscape by converting an adversarial liability determination into an administrative claims process against a fixed trust corpus.

A 524(g) trust converts open-ended litigation risk into a fixed, administratively processed claims pool, which materially changes the underwriting proposition for funders — recovery becomes a function of trust payment percentages and processing timelines rather than litigation outcomes.

Funders with claims against a defendant heading toward Chapter 11 must assess trust corpus adequacy, projected payment percentages relative to the trust's own claims estimate, and the queue of pending trusts in the same disease category, since underfunded trusts have historically reduced payment percentages well below full claim value as processing years accumulate.