• In light of the economic downturn caused by the COVID-19 pandemic, bankruptcy and restructuring considerations are a reality for many organizations.
• Debtors reorganizing under Chapter 11 of the U.S. Bankruptcy Code should be aware that environmental obligations may be exempt from the automatic stay and that some environmental obligations will not be dischargeable in bankruptcy.
• This Holland & Knight alert provides an overview of common issues arising at the intersection of bankruptcy and environmental law.

With economic downturn comes bankruptcy.

Esta é a primeira edição do “Brasília em Pauta”, um boletim preparado pela equipe de Contencioso de Brasília, contendo os principais casos a serem julgados pelo Supremo Tribunal Federal (STF), Superior Tribunal de Justiça (STJ) e Tribunal de Contas da União (TCU), bem como importantes questões a serem votadas pela Câmara dos Deputados e Senado Federal.

The Federative Republic of Brazil is the largest country in South America and the world’s fifth largest country, both by land mass (almost 8.6 million square kilometers) and population (more than 200 million people). It is the only lusophone (Portuguese-speaking) country in otherwise Spanish-speaking Latin America and the largest lusophone country in the world. Brazil is a member of the G20, and one of the BRICS countries, along with Russia, India, China and South Africa. The country’s Constitution serves as the foundation of the Brazilian legal framework and sets forth fundamental rights.

The Supreme Court this winter will hear (and in one case, has heard and determined) high-profile appeals involving federal and provincial government powers, corporate rights under the Charter of Rights and Freedoms, and two complex commercial appeals.

The Court is also expected to release several decisions on contract law in 2020 that will have significant implications for businesses.

Appeal Heard and Decided

With the growing concern over the environmental impacts of commercial activity, provinces have enacted and expanded environmental legislation in order to hold companies accountable for the costs of remediating the environmental harm they cause. However, regulators have struggled with how to hold companies accountable for environmental harm when they become insolvent. For many years, clean-up obligations have been treated as unsecured claims lacking priority over secured claims.

In a decision handed down on January 31, 2019, the Supreme Court ordered that a bankrupt oil and gas company fulfil its obligation to reclaim abandoned oil wells before paying any creditors. This decision has since sparked conflicting reactions across the country: first, because it gives clear precedence to environmental protection in the event of bankruptcy, and second, because of the influence it will likely have over business decisions in industries where environmental risks are involved.

Dans un arrêt du 31 janvier 2019, la Cour suprême ordonne qu’une société pétrolière faillie s'acquitte d’abord de ses obligations de remise en état des puits de pétrole abandonnés, avant de procéder à tout paiement en faveur de ses créanciers. Une décision qui suscite des réactions opposées d’un bout à l’autre du pays, puisque, d’une part, elle donne clairement préséance à la protection de l’environnement en cas de faillite, mais que, d’autre part, elle risque d’influencer les décisions d’affaires dans des industries où des risques environnementaux sont en jeu.

1. Introduction

With the growing concern over the environmental impacts of commercial activity, provinces have enacted and expanded environmental legislation in order to hold companies accountable for the costs of remediating the environmental harm they cause. However, regulators have struggled with how to hold companies accountable for environmental harm when they become insolvent. For many years, clean-up obligations have been treated as unsecured claims lacking priority over secured claims. On January 31, 2019, the Supreme Court o

On January 31, 2019, the Supreme Court of Canada decided, in Orphan Well Association v. Grant Thornton Ltd., that a provincial regulator, in this case the Alberta Energy Regulator (the “AER”), can enforce end-of-life obligations with respect to oil wells, pipelines and other provincially regulated facilities belonging to a bankrupt company or its trustee in bankruptcy, even if the enforcement orders adversely affect the assets in the bankrupt’s estate and its secured creditors.