Environmental

Sonnenschein's Corporate Reorganization & Bankruptcy Practice Group, together with the firm's Environmental/Energy, Real Estate, Litigation and other practice groups, works on a variety of environmental issues arising in bankruptcy or distressed situations across the nation.  Areas in which Sonnenschein has significant expertise include:

• Discharge of environmental claims in bankruptcy
• Asset sales in bankruptcy free and clear of environmental claims
• Ability to specifically enforce environmental cleanup obligations during the pendency of a bankruptcy case
• Determination of environmental liabilities, including assessing claims of adjacent landowners, former owners, PRPs, or government agencies
• Effect of PRP bankruptcy on remaining PRPs
• Structuring environmental settlements to maximize their enforceability in a subsequent bankruptcy case, including treatment of escrows and letters of credit
• Treatment of mass tort claims in bankruptcy
• Treatment of contingent liabilities for solvency, claim distribution and bankruptcy voting purposes
• Treatment and transferability of insurance coverage
• Secured and structured financing, foreclosures and workouts
• Resolving pre- and post-filing environmental compliance liabilities

Representative Engagements

The following is a summary of certain of the matters in which we have been actively involved for the party or parties noted in the descriptive text and that are of a public nature.  There are also representations in non-public matters that are not discussed by name herein. 

Philip Services Corporation (S.D. Tex.):
We represented over 40 affiliated debtors in the United States and Canada in the second Chapter 11 filing for this debtor.  The debtor's businesses involved hazardous waste disposal, scrap metal yards and industrial cleaning.  In this second Chapter 11 case, the debtors sought to abandon burdensome environmentally impaired properties to the applicable states and discharge their environmental liabilities.  The abandonment motions and discharge proceedings resulted in creative structured settlements with applicable state and federal environmental agencies.

Federal Mogul, Inc. (Del.): 
We represent the Official Committee of Unsecured Creditors in this case of one of the world's largest manufacturers of aftermarket auto parts.  Environmental and asbestos based claims are significant issues.  On behalf of the unsecured creditors committee, we are deeply involved in negotiations with PRPs, environmental regulators and other claimants to resolve and minimize environmental obligations.

Westpoint Stevens, Inc. (S.D.N.Y.): 
In this case, we represented the prevailing asset purchaser in a competitive auction.  As part of the auction process, extensive notices were given to potential environmental related claimants.  The notice process included efforts to identify adjacent landowners and other potential creditors who were not originally scheduled in the case.

Al-Tech, Inc. (W.D.N.Y.):  
We represented a co-liable party in these cases involving steel mills in western New York.  Among the issues at stake were:  (i) treatment of environmental claims under the bankruptcy plan, and (ii) attempts by an asset purchaser to buy free and clear, including agreements with New York State regarding ongoing post-closing issues at the site.  There also were issues regarding claims between the Al-Tech bankruptcy estate, pending in Buffalo, and the Allegheny bankruptcy estate, pending in Pittsburgh.

Metcoil, Inc. (Del.): 
We represented Travelers Insurance in this case, in which TCP liabilities were a major factor.  We negotiated a complex settlement of the insurance coverage in the case.  Among the more significant issues at stake were:  (i) enforceability of an asserted pre-petition settlement agreement, (ii) liability of the non-debtor parent corporation, (iii) assessment of positions of future TCP claimants, and (iv) the intersection of these issues with the plan process.

Insilco (N.D. Ind.): 
We represented a defendant that had the third largest responsibility for the cleanup of an abandoned recycling site.  When Insilco, the defendant with the largest share, declared bankruptcy, we worked closely with the United States EPA and the Department of Justice to maximize the proceeds from the estate and the insurers to fund the settlement with EPA for remediation of the site.

UAL Corp. (N.D. Ill.): 
We represented the Official Committee of Unsecured Creditors in the successful reorganization of United Airlines.  As part of claims processing, tens of millions of dollars of environmental claims, including claims related to operations at airports, were evaluated and resolved at significant discounts, thus minimizing the dilutive impact of environmental claims on the recovery of other unsecured creditors.

SIL Clean Water, LLC (N.D. Ill./W.D. Va. (venue transfer)): 
We represent a subsidiary of Cargill (an international provider of food, agricultural, and risk management products and services) in this Chapter 11 case.  The debtor, a waste water treatment plant located in Virginia, filed for bankruptcy protection after the Commonwealth of Virginia sought injunctive relief for violations of environmental laws.  The debtor has also initiated suit against all four of its major customers and the Commonwealth of Virginia.

Chemetco (S.D. Ill.): 
One of our environmental partners served as an expert witness in this Chapter 7 case, in which the trustee sought to recover alleged fraudulent transfers from a former president and principal shareholder.  The testimony related to whether a contingent environmental liability made the debtor insolvent for fraudulent transfer purposes under then applicable accounting standards. 

Union Power Partners (D. Ariz.): 
We represented major debt-holders in the reorganization of these two gas-fired power plants.  The debt-holders initially objected to confirmation and those objections were settled at confirmation.  There were FERC issues in the case as well.

VMS Realty Partners: 
We handled the out-of-court wind-down of the holding companies for over 400 properties, including several with environmental issues.

Various Superfund Sites: 
We frequently represent solvent PRP groups and individual clients to protect their interests and maximize recovery of debtor PRP assets and regularly coordinate with environmental regulators to engage their assistance in asserting claims against the bankrupt estate.  We also represent debtor PRPs to resolve regulator and PRP group claims.

Legislative and Regulatory Developments: 
Sonnenschein's bipartisan Public Law and Policy Strategies Group strategically analyzes real-time legislative and regulatory developments in the environmental and workout arenas-from asbestos legislation reform and EPA rulemaking to energy reform and appropriation matters.  We not only provide behind-the-scenes intelligence, but also develop comprehensive advocacy campaigns to influence legislative and regulatory outcomes to benefit our clients.

Foreclosures and Workouts: 
We have handled a number of foreclosures and workouts of property with material environmental issues, including application of the special rules for foreclosing lenders under CERCLA.

Health Care Shutdowns: 
We have dealt with biomedical, nuclear, narcotics and other regulated materials in connection with healthcare facility shutdowns and demolitions.