Administrative fees and other claims will soak up that money, and state and local officials told the Free Press they fear the cleanups will be shortchanged.. The New York Attorney General's Office, seeking to protect environmental claims for cleanup at Massena and other sites, argued that federal and state regulatory requirements should not be eliminated by a bankruptcy sale.How bankruptcy can affect environmental cleanups
What typically happens in bankruptcy?
Generally, in a traditional Chapter 11 reorganization, governments with environmental claims against a company become like other claimants seeking payment. Governments' ability to place liens on property gives claims added leverage in that process, allowing more money to go to cleanup efforts, according to John Pottow, an expert in bankruptcy law at the University of Michigan.
What happened here?
General Motors, in Chapter 11 reorganization, was allowed to sell most of its properties to the new GM, leaving behind unwanted properties that contain environmental liabilities estimated at $530 million. Motors Liquidation Co. -- the old GM -- has $1.2 billion to wind down the unwanted assets, operations and liabilities.
What if GM had gone out of business?
If GM had liquidated the entire company, the environmental claims would have been treated like any other claim. Assets would have been sold to pay debts at a reduced rate.
If the property still required cleanup, the government would have to do it and likely would impose a lien that could inhibit developers from buying the land, much like the situation expected for some of GM's unwanted properties.
What happens with Superfund?
The Superfund cleanup process is a federal program that allows the U.S. Environmental Protection Agency to clean up hazardous waste and make responsible parties either perform the cleanup or pay for it.