Does Bankruptcy Eliminate Environmental Liabilities?

If a company files for bankruptcy, does it change the liability associated with its contaminated property? The short answer is probably not. Most likely a purchaser or surviving entity may remain the hook for cleanup costs.

There always has been tension between the bankruptcy laws with its policy of permitting businesses to get a “fresh start” and environmental laws that provide that “the polluter must pay.” If environmental concerns are not covered in the bankruptcy proceedings and claims have not been resolved, a purchaser or a new entity that emerges from bankruptcy may face liability concerns. Ongoing cleanup costs and obligations remain and should be addressed during and after the bankruptcy filing.

As with any other real estate transaction, potential purchasers, investors and lenders should conduct thorough due diligence. All parties involved in a real estate transaction needs to understand the environmental condition of the property and assess both the short and long term risks before moving forward with the deal.

For more information on the legal implications associated with environmental liabilities, bankruptcy, and environmental due diligence, go to

Environmental Attorney Website

Caltha LLP provides expert environmental consultant services in Minnesota to obtain air and wastewater permits, evaluate regulatory requirements, and to develop cost effective compliance programs.

For further information, contact Caltha LLP at:
Email: info@calthacompany.com
Phone: (763) 208-6430
Website: http://www.calthacompany.com/
Two Minnesota offices - Minneapolis and Pine River