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Holding: Affirmed. Cleanup costs incurred by claimant on contaminated property purchased from debtor could not be treated as administrative expenses, where agreements between parties apportioning responsibility for remediation work were all entered into prepetition, although some of the costs were incurred postpetition.
v. In re Mumce's Superior Petroleum Products, Inc., 736 F.3d 567 (1st Cir. 2013)
Issue: Chapter 11 debtors' postpetition conduct, in failing, contrary to New Hampshire state court's order, either to construct spill protection required by New Hampshire environmental law or to remove nonconforming underground oil storage tanks, and in instead installing new tanks that were also not in compliance with state law and using these tanks to continue to operate their fuel distribution and convenience store business, was not mere passive failure to remedy environmental violation that they committed prepetition, but in nature of fresh, postpetition violations of New Hampshire environmental law and state court's order, such that fines and penalties assessed for debtors' contempt were payable on priority basis as administrative expenses The United States District Court for the District of New Hampshire, Joseph N. LaPlante, J., 490 B.R. 5, affirmed.
Holding: Fines and penalties assessed for debtors' contempt were payable on priority basis as administrative expenses. The Court "reasoned that in light of "today's extensive environmental regulations," the payment of a fine for failing to comply with those regulations is "a cost 'ordinarily incident to operation of a business.' " Id. at 20 (quoting Reading Co., 391 U.S. at 483,
88 S.Ct. 1759)." The Court "also observed that "[d]ebtors in possession ... do not have carte blanche to ignore state and local laws protecting the environment against pollution." Id."
vi. In re Philadelphia Newspapers, LLC, 690 F.3d 161 (3d Cir. 2012)
Issue and Holding: Bankruptcy court and district court were correct in sustaining debtor's objection to administrative expense request on the basis that the movant's claim was based on a post-petition tort so speculative that no discernible benefit could have been conferred on the debtor's estate.
vii. In re Davenport Beverage Corp., 505 B.R. 374 (Bankr. D. Mass. 2014).
Issue: Chapter 11 debtor's commercial landlord filed motion for allowance of administrative expense claim.
Holding: (1) contractual obligations arising under debtor's unexpired commercial lease, prior to debtor's rejection of lease, were payable on priority basis pursuant to bankruptcy statute
©2014 William L. Norton III
