In re apco liquidating trust

24-Jan-2015 01:35

Lopez and Matthew Morton In a pair of bench decisions in the chapter 11 cases of Lyondell Chemical and Chemtura Corporation, Bankruptcy Judge Robert Gerber applied section 502(e)(1)(B) of the Bankruptcy Code to disallow environmental contribution claims asserted against the debtors by co-liable parties.

The decisions clarify a murky area at the intersection of the environmental and bankruptcy laws.

Section 502(e)(1)(B) requires disallowance of a claim held by a creditor if (a) the claim is contingent at the time of its allowance or disallowance, (b) the claim is for reimbursement or contribution, and (c) the debtor and the creditor are co-liable on the underlying obligation giving rise to the claim.

To disallow a claim under this section, a debtor must prove all three prongs.

Thus, even in circumstances where the creditor has not expended funds on a claim, and therefore has a contingent claim, the creditor still may argue it is not co-liable with the debtor.

Atlantic Research Corporation (ARC) voluntarily cleaned up a government-owned property it had contaminated while retrofitting rocket motors for the U. The Supreme Court affirmed the Eighth Circuit’s decision.