Can Environmental Claims in Bankruptcy Proceedings Cripple Best-Laid Plans?

A distressed entity facing numerous environmental liabilities may consider filing for bankruptcy relief as an appealing option to address its environmental claims. However, bankruptcy is by no means a “quick fix” to stop enforcement of environmental issues; although some immediate enforcement or collection actions may be delayed as a result of filing for bankruptcy, environmental claims must be addressed throughout the bankruptcy case. If these claims are not addressed during a bankruptcy, lingering environmental liabilities and the significant, expensive fines often associated with such liabilities may negate the relief an entity seeks or has already sought pursuant to title 11 of the U.S. Code, 11 U.S.C. §§ 101–1532 (Bankruptcy Code).