Environmental Claims Get Harder To Discharge

Law360, New York (November 22, 2010, 4:05 PM EST) -- The U.S. Bankruptcy Court for the Southern District of New York recently ruled that a debtor’s environmental obligations under an injunction were not dischargeable. The Oct. 21 decision in Mark IV Industries Inc. v. the New Mexico Environment Department is significant for two reasons.

First, in narrowing the scope of what constitutes a “claim” under the Bankruptcy Code, the decision increases the likelihood that environmental liabilities will plague debtors even after reorganization. Second, by introducing a new three-factor framework for determining whether environmental obligations are dischargeable,...
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