Executive Vice President
U.S. Chamber Institute for Legal Reform
Last week, Congressman Dave Trott (R-MI, 11th District) introduced legislation that would authorize the U.S. Department of Justice (DOJ) to conduct oversight of asbestos bankruptcy trust funds that currently hold over $18 billion in assets. The DOJ’s U.S. Trustee Program investigates abuse in pending bankruptcies, but it is unable to launch similar investigations of abuse in trust funds that are currently in operation. Representative Trott’s Enhancing United States Trustee Oversight Act of 2016 (H.R. 5618) would close this loophole and allow U.S. Trustees to ensure these trust funds are not shortchanged by waste and fraud.
Exploitation of asbestos bankruptcy trusts, which were established to compensate individuals harmed by exposure to asbestos, has forced dramatic reductions in their payments. Some now offer less than five percent of what they once promised to asbestos victims. Trust funds’ depletion also harms solvent companies and their shareholders, who pay more than their fair share when plaintiffs’ lawyers file “double dip” claims in court and with bankruptcy trust funds. More scrutiny of these trusts would diminish the damaging economic ripple effects of waste, fraud, and abuse while preserving assets for future claimants.
We commend Representative Trott’s introduction of this bill and his efforts to bring accountability to an opaque system that currently operates with almost no oversight.