Asbestos is a known human carcinogen. There is medical research directly connecting individual asbestos exposure to risk for mesothelioma and lung cancer, along with certain other debilitating medical conditions.
Despite public awareness of the risks of asbestos, many companies continued using asbestos for a variety of products for decades until changing regulations forced them to alter how they operate. Both consumers sickened by products containing asbestos and individuals exposed to asbestos through their employment may eventually take legal action against a business that used asbestos.
Compensation claims brought by those with cancer often involve a lawsuit against a company that used asbestos. What happens if a company goes out of business, possibly due to the expense of asbestos-related lawsuits?
Closing companies must account for future claims
Organizations preparing for dissolution or pursuing business bankruptcy proceedings typically need to disclose and plan for certain future financial liabilities. If a company exposed workers or consumers to asbestos, the courts may require that they create and fund a trust to pay future claims brought by those sickened due to the use of asbestos by the business.
The need to provide future support for those sickened by asbestos due to company practices can influence what happens to organizational assets during the bankruptcy or dissolution process. In cases where companies intend to continue operating, the courts may decline to grant bankruptcy protections for asbestos-related claims, as has been the case with repeated bankruptcy attempts by Johnson and Johnson.
Other times, particularly if the company becomes insolvent, as is the case with a California-based paint manufacturer, the dissolution process may likely include planning to cover future claims brought by those exposed to asbestos because of company practices. Kelly-Moore Paint cited asbestos lawsuits as an underlying reason for closing its stores. After almost 80 years of operations, the company cannot absorb the costs of additional lawsuits, but it may need to earmark resources for future claims.
In other words, even if a business that sold contaminated products or exposed its workers to asbestos without proper protection ceases operating, the parties affected may still have options for pursuing compensation. As such, learning more about the liability of businesses that use asbestos may benefit those recently diagnosed with cancer likely related to asbestos.