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Abbott and Mason Building and Joinery Contractors also left asbestos-containing materials outside the building in the open air, putting the public at risk.
The Health and Safety Executive (HSE) prosecuted the firm after it carried out work at the home of 96-year-old Mrs Ann Jenkins in Musters Road on 4 February 2010.
Abbott and Mason Building and Joinery Contractors Ltd, of Carter Lane, Mansfield, pleaded guilty to breaching Regulations 7, 8, 11(1), 16 and 24(1) of the Control of Asbestos Regulations 2006 and was fined a total of £20,000. The company was also ordered to pay full costs of £5,741.
The company was removing asbestos insulation board (AIB) which had been used to box in pipework behind the bath but many of Mrs Jenkins' possessions, including clothing and furniture was contaminated with asbestos fibres and had to be destroyed.
The dangerous work was spotted by the warden at the complex, who stopped the activity and took Mrs Jenkins - who had been sitting close to the bathroom - to a safe place. After staying with her family, Mrs Jenkins was relocated to another flat.
HSE told Nottingham magistrates that the firm knew that it was dealing with asbestos-containing material and, even though both partners had had asbestos awareness training, they failed to manage it appropriately, exposing employees, Mrs Jenkins and members of the public to asbestos fibres.
After the hearing, HSE inspector Frances Bailey said: "This company showed a wilful disregard for the health and safety of its employees and the public. Abbott and Mason knew the panels contained asbestos and should have dealt with it safely. Their actions caused a great deal of worry and stress for Mrs Jenkins, who has since passed away.
"The distress caused to her and the risks to the health of the public and the company's employees could have been easily avoided had the company taken sensible steps to ensure the right procedures were followed and the spread of potentially dangerous material was prevented."
In a victim impact statement given to the court, Mrs Jenkins' daughter, Mary Chivers, said: "My family are appalled that this incident had such devastating consequences for my mother. It was entirely preventable had proper measures been taken. She was very shocked and angry and found it difficult to come to terms with her situation. As time went on, she began missing the things she had lost and expressed grief. She was clearly distressed."
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