Environmental issues

Environmental risks in an insolvency

Environmental issues can affect the conduct and outcome of an insolvency. They may influence whether an insolvency practitioner (IP) accepts an appointment, whether a business can continue to trade, the strategy for a sale of the business or its assets and the amounts available for distribution to creditors.

Environmental liabilities may arise from, among other things:

1. •

   contaminated land

2. •

   breaches of environmental permits or other regulatory requirements

3. •

   waste management or pollution offences

4. •

   statutory remediation or clean-up obligations, and

5. •

   civil claims arising from environmental damage

An insolvency does not generally bring the company's environmental obligations to an end. The company may remain subject to regulatory requirements and enforcement action, and environmental liabilities may continue to affect the insolvent estate.

For a broader introduction to the environmental issues that may arise in an insolvency and the practical considerations for IPs, see Practice Note: R&I spotlight on environmental law.

Identifying environmental issues before and after appointment

Environmental risks should be identified as early as circumstances permit. The nature and extent of the enquiries required will depend...