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In re In re Wall Tube & Metal Prods. Co.

ELR Citation: 18 ELR 20013
Nos. No. 86-5963, 831 F.2d 118/26 ERC 1673/(6th Cir., 10/14/1987) Rev'd

The court holds that hazardous waste response costs incurred by Tennessee that would be recoverable from the debtor under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) are entitled to priority as administrative expenses in a voluntary bankruptcy proceeding under Chapter 7 of the Bankruptcy Code. The court holds that 28 U.S.C. §959(b) requires the liquidating trustee to comply with Tennessee's hazardous waste statute. This holding is consistent with the Supreme Court's decision in Midlantic National Bank v. New Jersey Department of Environmental Protection, 16 ELR 20278. Since, as Midlantic held, a trustee may not abandon property in violation of state environmental law, he also may not maintain or possess property in continuous violation of state law. The court holds that §959(b) applies to liquidating trustees as well as to trustees that are reorganizing the estate. The court holds that the CERCLA response costs incurred by Tennessee were "actual, necessary costs and expenses of preserving the estate" under §503(b)(1)(A) of the Bankruptcy Code and thus are entitled to priority as administrative expenses.

[The bankruptcy court decision is published at 16 ELR 20547. The district court decision is published at 17 ELR 20284.]

Counsel for State of Tennessee
W.J. Michael Cody, Attorney General; Michael D. Pearigen, Ass't Attorney General
450 James Robertson Pkwy., Nashville TN 37219
(615) 741-6474

Counsel for Trustee
Ferdinand Powell Jr.
115 E. Unaka Ave., Johnson City TN 37605
(615) 926-0716

Counsel for Debtor
Robert M. Child
Child, O'Connor & Petty
15th Fl., Third Nat'l Bk. Bldg., Knoxville TN 37901
(615) 525-7115

Before: KEITH, Circuit Judge; PECK, Senior Circuit Judge; and DOWD, District Judge.*