Environmental Issues in Bankruptcy: Reconciling the Conflicting Goals of Bankruptcy and Environmental Laws

Description

The Bankruptcy Code frequently conflicts with state and federal environmental laws in the administration of a bankruptcy case. The goal in bankruptcy proceedings is to give a debtor a "fresh start" by identifying the debtor's assets and liabilities to enable the debtor to discharge and pay outstanding claims under the priorities established in the Bankruptcy Code that will allow the debtor to reorganize or in some cases liquidate.

In contrast, the "polluter pay" policy of environmental laws requires remediation of environmental contamination, often over an extended period and with ultimate remediation costs not yet determined, with the expense and responsibility of cleanup allocated among potentially responsible parties (PRPs).

PRP claims and government enforcement actions receive differing treatment in bankruptcy. Some obligations and claims may be discharged, while some may survive depending on when the claim arises, the existence of statutory or super liens, public health, the status of ongoing remediation, and other considerations.

Environmental obligations also impact the debtor's ability to conduct a 363 asset sale and abandon the contaminated property. Counsel must understand how environmental issues impact these bankruptcy rights.

Listen as our authoritative panel examines the conflicts between environmental law and bankruptcy law and how various environmental obligations and claims are treated in bankruptcy. The panel will review court decisions and provide an analysis of relevant Bankruptcy Code provisions to explain how cost recovery, contribution, remediation, and other actions are evaluated in bankruptcy. The panel will also discuss pre-petition vs. post-petition claims, enforcement actions that can trump the automatic stay, the effect of super lien statutes, environmental reserves, and other ways that environmental claims can uniquely impact bankruptcy proceedings.