Environmental Liabilities and Discharge Under a §363 Sale

Section 363 of the Bankruptcy Code, which allows a trustee or debtor in possession to sell its assets outside of the ordinary course of business “free and clear” of interests, only provides limited protection to the buyer with respect to certain environmental liabilities. For example, a purchaser might be held liable for any contamination based merely on its status as a current or former owner of the property, notwithstanding the language of any sale order, and notwithstanding the fact that it was uninvolved in the underlying act that resulted in liability. Therefore, it is essential that buyers protect themselves by closely analyzing potential environmental obligations.

To read the full article from ABI's June 2024 Journal, please download the PDF below.