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In re Eagle-Picher Indus., Inc.

ELR Citation: 28 ELR 20492
Nos. 95-4128, 131 F.3d 1185/(6th Cir., 12/16/1997) Requiring bankruptcy court analysis

The court holds that a corporation's contingent claims for environmental cleanup costs associated with real property it purchased from a potentially responsible party (PRP) that filed for bankruptcy are claims for reimbursement and contribution and, therefore, may be disallowed if the bankruptcy court determines on remand that the corporation is co-liable with the PRP for any future claims. The court first holds that the corporation may be co-liable with the PRP. The Federal Rule of Bankruptcy Procedure rule 9006(b) empowers a bankruptcy court to permit a late filing if the tardiness was the result of excusable neglect. If the U.S. Environmental Protection Agency (EPA) or state environmental agencies could show that their failure to file a timely claim with the bankruptcy court was the result of excusable neglect, their claim would not be time barred and the corporation would thus be co-liable with the PRP. Contrary to the corporation's assertions, the bar date set by the bankruptcy court for filing claims against a party seeking bankruptcy is not an absolute bar to future EPA or state agency claims against the PRP. Because it is not clear from the record whether such a late filing should have been allowed, the case is remanded to the bankruptcy court so that it can conduct the requisite analysis for determining excusable neglect. The court next holds that on remand, the bankruptcy court's analysis must take full account of the circumstances surrounding the negotiation and adoption of a consent agreement entered into between the PRP and EPA, which allows EPA to file claims against the PRP in the future. Given the equitable aim of Chapter 11 reorganization and the unique circumstances of this case, justice dictates that the bankruptcy court's excusable neglect analysis take account of the consent agreement. Further, although it is not contained in the record, the terms of the consent agreement and circumstances surrounding its negotiation and adoption are bound to be relevant. The court then holds that the corporation's claims are for reimbursement and contribution. The corporation's assumption that it cannot be co-liable with the PRP and, therefore, cannot have claims for reimbursement and contribution, is unwarranted. If the corporation and the PRP are co-liable, it is irrelevant that the corporation can also concoct an alternative theory on which to premise its claim against the PRP. Moreover, even assuming they are not co-liable, the corporation's New Jersey Environmental Cleanup Responsibility Act claim amounts to nothing more than a thinly disguised claim for reimbursement and contribution. So long as they are both potentially responsible for environmental cleanup costs of the property, the legal theory underpinning that shared responsibility is irrelevant.

Counsel for Appellant
Thomas W. Coffey
Cors & Bassett
1200 Carew Tower, Cincinnati OH 45202
(513) 852-8200

Counsel for Appellee
Stephen Karotkin
Weil, Gotshal & Manges
767 5th Ave., New York NY 10153
(212) 310-8000

Before Martin and Ryan, JJ.