THE MANVILLE Corp., for many years the world's largest asbestos producer, has outlined a plan to rescue the company from bankruptcy while assuring victims of asbestos exposure of at least $2.5 billion in compensation. No plan can provide a happy ending to the sorry story of asbestos exposure, and lawyers for the many parties involved will surely haggle over some aspects before agreement is finally reached. But the main features of the plan appear to promise decent and swift compensation for victims, and that is the principal criterion by which the settlement should be judged.

The plan was developed by New York attorney Leon Silverman -- a fact that is significant not only because of Mr. Silverman's distinguished career but because he was appointed by the bankruptcy court to represent the interests of people who may in the future develop lung cancer or other asbestos- related diseases although they have not yet. Since the effects of exposure may take decades to become evident, it is especially important that any settlement ensure an adequate flow of future funds.

The Silverman plan would ensure funds by diverting at least 50 percent -- perhaps as much as 80 percent -- of Manville's stock into a special trust fund into which the company would pay hundreds of thousands in insurance and cash as well as 20 percent of its annual profits for years to come. More than half a billion dollars would also be set aside to pay unsecured creditors who have not been paid since 1982, when the company filed for bankruptcy protection in the face of 16,500 lawsuits then filed by victims.

Lawyers for victims' groups have generally expressed satisfaction with the estimated value of the settlement, perhaps $3 billion, which is much more than Manville has ever offered before. Moreover the company plans to join the Wellington Agreement, an industry-wide arbitration group that should provide fast, fair claims settlements for workers who choose to forgo further individual litigation.

Stockholders won't be enthusiastic. But the risks of free enterprise are meant to fall on equity holders. In this case, stockholders are lucky to emerge with any hope of future returns. Years of litigation have uncovered evidence of company efforts to hide health information from workers as far back as the 1930s. Without a settlement, legal costs and punitive damages could wipe out all stockholder equity and still leave many victims unpaid.

An indirect party to the settlement would be the federal Treasury, which would lose revenue from Manville's apparent ability to deduct funds transferred into the trust from its taxable income. But the Treasury would lose all taxes from Manville if it were forced out of business. Moreover, since large numbers of injukers were exposed to asbestos while working in Navy shipyards, an indirect government contribution is not inappropriate.