Fresh Air and Fresh Start: Are Environmental Regulatory Penalties Dischargeable?

Read the full story at JD Supra.

Two courts recently answered “yes,” finding that environmental claims brought against reorganized debtors by government entities were discharged under confirmed Chapter 11 plans of reorganization. In In re Exide Techs., 613 B.R. 79 (D. Del. 2020), the District of Delaware held that pre-petition, non-compensatory air quality penalties imposed on a Chapter 11 debtor by a state regulator were subject to discharge in bankruptcy. And in In re Peabody Energy Corp., No. 18-3242, 2020 WL 2176028 (8th Cir. May 6, 2020), the Eighth Circuit reached a similar result with respect to claims brought by municipalities against a Chapter 11 debtor for its alleged contributions to global warming.

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