Note: Published in EDR Insider

Bank Pays for Bankrupt Borrower’s Environmental Legacy

Earlier this year, in one of the first Superfund decisions against a bank, contamination left behind at an industrial site abandoned by a bankrupt borrower cost a lender nearly $1 million. The borrower, a chemical company, manufactured and marketed chemicals for the cosmetics and water treatment industries. Its operations resulted in significant quantities of hazardous laboratory waste, chemical products and wastewater, which were stored in containers on the property.

The lender seized the manufacturer’s operating funds in 2004, and the manufacturer subsequently abandoned its facility, leaving behind the containers of hazardous materials. During the winter months, the containers froze and started to leak in the unheated building. After the situation was discovered, the New York Attorney General filed a lawsuit against the bank, alleging that it knew about the potentially hazardous situation but did not contact the authorities as required by law.

In settling the lawsuit, the bank agreed to pay New York State nearly $1 million in penalties and other costs. It also agreed to implement an internal environmental training program to educate its employees on the environmental compliance obligations of companies facing financial difficulty and lenders’ responsibilities.

Read remainder of article at EDR Insider

This entry was posted on Friday, August 15th, 2008 at 1:46 am and is filed under ●Environmental Liability Issues.

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