Insolvency transactions—the role of the environmental consultant (acting for administrator or in pre-pack deals)
Produced in partnership with RSK
Insolvency transactions—the role of the environmental consultant (acting for administrator or in pre-pack deals)

The following Environment guidance note Produced in partnership with RSK provides comprehensive and up to date legal information covering:

  • Insolvency transactions—the role of the environmental consultant (acting for administrator or in pre-pack deals)
  • Responsibilities
  • Timing
  • Instructing an environmental consultant
  • Potential liability

'Caveat emptor', meaning 'let the buyer beware', is a common law principle meaning the seller is under no duty to disclose material facts to a prospective buyer and it also applies in insolvency transactions.

See Practice Notes: Seller’s duty of disclosure and buyer’s remedies, Liability for inaccurate replies to enquiries, Standard pre-contract searches and Types of environmental investigations.

Responsibilities

The responsibility for compliance with environmental law rests with a company, whether it is insolvent or not. It is therefore important to identify the accountability of the insolvency practitioner and lender in the event of a company becoming insolvent as the office-holder can become liable. Insolvency practitioners need to understand the environmental obligations of a company before accepting any appointment, and lenders involved need to understand potential liabilities that may be present.

Aside from financial and company registration requirements for directors on maintaining financial stability, additional provisions are also required under environmental legislation such as the need to obtain an environmental permit. As such, any transaction should include a review, by an environmental professional, to establish whether environmental permits issued have appropriate financial provisions which can then be further reviewed by the transaction team/appointed legal practice.

A key point to note will be any pending or likely prosecution, civil sanctions and fines levied against either the target company/asset and those associated with the organisation.