EnvironmentalObligationsinBankruptcy-WilliamsMullen.pptVIP

Environmental Obligations in Bankruptcy and Distressed Projects Sean M. Sullivan Williams Mullen 301 Fayetteville Street, Suite 1700 Raleigh, NC 27601 (919) 981-4312 ssullivan@ Topics Background on Bankruptcy Environmental Obligations in Bankruptcy Environmental Obligations in Distressed Developments Case Study Background on Bankruptcy Chapter 7 versus Chapter 11 Bankruptcy Chapter 7 – A trustee takes control of the debtor’s property and liquidates its assets to pay creditors. Goal is to give a debtor a “fresh start” but it doesn’t always turn out that way. Amount paid to creditors depends on their priority versus others under the bankruptcy code. Background on Bankruptcy Chapter 7 versus Chapter 11 Bankruptcy Chapter 11 – Debts are reorganized according to a court-approved plan. Typically known as “debtor in possession” Debtor typically retains possession of assets and continues operating under court supervision. Primary goal is to develop a plan of reorganization of debts, which is then confirmed by the court. Background on Bankruptcy Definitions Debtor’s Estate – all of the debtor’s assets that are available for payment of creditors. Abandonment – procedure that allows a trustee or a debtor in possession to remove certain property or assets from the estate and avoid related costs. This can be a controversial issue in the environmental arena. Background on Bankruptcy Definitions Discharge in Bankruptcy – debts are repaid and forgiven. Commonly, this is seen as the purpose of bankruptcy, to give the debtor a fresh start. Not exactly, if you’re a corporation in Chapter 7. Not all debts are dischargeable in bankruptcy. For example: Secured Creditors. Fines and penalties. Fraudulent transactions. Background on Bankruptcy Definitions Discharge in Bankruptcy Chapter 7 – only individuals Individuals get a discharge, corporations do not. Chapter 7 just provides an easy way for a corporation to wind up its affairs prior to dissolution. Chapter 11 – discharges fo