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229 Main St. Ltd. Partnership v. Massachusetts Dep't of Envtl. Protection

Citation: 32 ELR 20001
No. No. 00-2236, 251 B.R. 186/262 F.3d 1/(1st Cir., 08/22/2001)

The court holds that Massachusetts' environmental superlien statute, which allows the commonwealth to place a priority lien on property after spending money assessing or cleaning up a polluted tract of land, evades the Bankruptcy Code's automatic stay provision. The case arose after Massachusetts sought to place a lien against a debtor's property to secure present and future cleanup interests. The automatic stay provision gives debtors breathing room by stopping collection efforts in their tracks and permitting their resumption when the stay is lifted by the bankruptcy court or dissolved by operation of law. The automatic stay, however, is not absolute. To fall under the stay's exception, there must be an act to perfect an interest in property under circumstances in which the perfection-authorizing statute fits within the contours of Bankruptcy Code § 546(b)(1)(A).

The court first holds that Massachusetts' environmental superlien statute falls within the exception to the Bankruptcy Code's automatic stay provision. The commonwealth had an interest in the property at the time the debtor filed its bankruptcy petition. The debtor was liable to the commonwealth for past and future cleanup costs, the commonwealth had a present right to record a lien on the property, and the commonwealth set that process in motion by notifying the debtor of its intentions and by participating vigorously in the administrative hearing. Further, Massachusetts' environmental superlien statute qualifies as an act to perfect. When the commonwealth takes the step of recording under the environmental superlien statute, that act both creates and perfects its lien. The court next holds that the statute satisfies Bankruptcy Code § 546(b)(1)(A) because the law applies generally, it allows creditors to perfect an interest in property, and such perfection is effective against previously acquired rights in the property.

Counsel for Appellant
Catherine J. Savoie
Posternak, Blankstein & Lund
100 Charles River Plaza, Boston MA 02104
(617) 973-6100

Counsel for Appellees
Dana M. Gershengorn, Ass't Attorney General
Attorney General's Office
One Ashburton Pl., Boston MA 02108
(617) 727-2200

Selya, J. Before Cyr and Lipez, JJ.