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

Pre- vs. Post-Petition Claims, Enforcement Actions, Statutory Super Liens, Asset Sales, Abandonment and More

Recording of a 90-minute CLE webinar with Q&A

Conducted on Tuesday, March 27, 2018

Recorded event now available

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Program Materials

This CLE webinar will investigate the conflicts that exist between the Bankruptcy Code and state and federal environmental statutes and provide counsel with an understanding of how these issues are resolved in bankruptcy proceedings. The panel will review relevant court decisions and why some environmental claims receive special treatment in bankruptcy.


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 assets and liabilities of the debtor to enable the debtor to discharge and pay outstanding claims in accordance with 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 of time and with ultimate remediation costs not yet determined, with the cost and responsibility of cleanup allocated among potentially-responsible parties (PRPs).

PRP claims and government enforcement actions receive varied 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 ability of the debtor to conduct a 363 asset sale and abandon contaminated property. Counsel must understand how environmental issues affect these bankruptcy rights.

Listen as our authoritative panel examines the conflicts between environmental law and bankruptcy law and how various types of environmental obligations and claims are treated in bankruptcy. The panel will review court decisions and provide 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.



  1. Introduction
    1. Interplay of Bankruptcy Code and environmental statutes
    2. Treatment of environmental liabilities under Bankruptcy Code
    3. Filing and negotiating environmental liabilities in the bankruptcy process
  2. Environmental obligations and claims in bankruptcy
    1. When does a claim arise?
    2. Claim priorities and subordination (§510)?
    3. Exceptions to automatic stay for certain governmental agency actions
  3. Dischargeability of environmental obligations and claims under Chapter 11
    1. Discharge of cleanup obligations
      1. Owned vs. non-owned properties
      2. Discontinued operations
      3. Injunctions
    2. Effect of superlien statutes
    3. Discharge of co-PRP claims against debtor
  4. Treatment of post-petition environmental cleanup as an administrative expense (28 U.S.C. §959(b).)
  5. Estimating and discharging addressing contingent environmental claims
  6. Sale and disposition of contaminated assets
    1. Sales pursuant to §§1141 and 363 of the Bankruptcy Code
    2. Abandonment under § 554
    3. Rejection of leases under § 365
    4. Use of custodial trusts


The panel will review these and other key issues:

  • When are environmental claims dischargeable in bankruptcy and what are the limitations?
  • What kinds of governmental actions are unaffected by the automatic stay?
  • When are post-petition cleanup expenses treated as first priority administrative expenses?
  • How are contingent environmental claims for contribution or cost recovery claims addressed in bankruptcy?
  • Can the bankrupt debtor sell or abandon contaminated assets?
  • How do governmental agencies with outstanding cleanup orders and environmental claims influence the outcome of the bankruptcy case?
  • Due diligence considerations for sale of assets in bankruptcy proceedings
  • Drafting and negotiating tips


Lamparello, Dawn
Dawn M. Lamparello

K&L Gates

Ms. Lamparello concentrates her practice in environmental law, including related litigation and regulatory compliance...  |  Read More

Page, Mark
Mark W. Page

Massey & Gail

Mr. Page has over 25 years of experience in all aspects of bankruptcy cases and enforcement of creditors’ rights....  |  Read More

Schnapf , Lawrence
Lawrence P. Schnapf

Schnapf LLC

Mr. Schnapf primarily concentrates on environmental risks associated with corporate, real estate and Brownfield...  |  Read More

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