When an Insolvency Practitioner (IP) can become personally liable for breaches of environmental law
Produced in partnership with Bond Dickinson LLP
When an Insolvency Practitioner (IP) can become personally liable for breaches of environmental law

The following Restructuring & Insolvency guidance note Produced in partnership with Bond Dickinson LLP provides comprehensive and up to date legal information covering:

  • When an Insolvency Practitioner (IP) can become personally liable for breaches of environmental law
  • Sources of environmental liability
  • How could liability under these regimes attach to an IP?
  • How could liability in relation to claims from neighbours attach to an IP?
  • Specific risks in relation to different types of IP
  • Pre-pack sales
  • Share sale and asset sale

Sources of environmental liability

There are three main sources of potential personal liability under environmental law that IPs should be aware of. These are:

  1. contaminated land legislation (Contaminated Land Regime)

  2. other regulatory regimes, and

  3. neighbour claims

Contaminated Land Regime

Local authorities have a duty to investigate their areas for the presence of contamination, identify contaminated sites and require clean-up where appropriate.

If the authority identifies contaminated land, liability for cleaning up the contamination rests initially with the original polluter. However, liability can also fall to someone who knowingly permits contamination ie someone who is aware of, or who should, given their particular role, have been aware of contamination and who is in a position to do something about it but fails to do so. For example, if an IP is aware, or should have been aware, that oil drums stored on a property are leaking into the ground and fails to take steps to address the problem. For more information on the six exclusion tests, see DEFRA Environmental Protection Act 1990 Part 2A Contaminated Land Statutory Guidance (April 2012), paragraphs 7.38–7.61

A person who would otherwise be liable for contamination can be excluded for such liability under one of six exclusion tests. The exclusion test which is most frequently triggered is the so-called 'sold with information' test. On the sale of a