Route 21 Assoc. of Belleville, LLC v. Millennuim Custodial Trust (In re Lyondell Chemical Company)

Summarized by Wayne Greenwald , Jacobs, PC, Greenwald, P.C.
12 years 4 months ago

Citation:

In re Lyondell Chemical Co. --- Fed.Appx. ----, 2013 WL 5733196 C.A.2 (N.Y.),2013.

Tag(s):

Ruling:

This Summary Order’s terms render it of no precedential value. Nevertheless, all information is instructive. The Summary Order adopted the District Court’s decision which denied a purchaser of contaminated property’s motion: a.) to compel the debtor-seller’s specific performance of a site remediation agreement; and b.) for an administrative priority for the creditor’s future clean up costs claim. The Second Circuit restated the debtor’s right to reject the agreement as an executory contract, under 11 U.S.C. § 365, and the resulting claim’s treatment as a pre-petition claim, payable in bankruptcy dollars. The Court rejected the creditor’s argument that the inability to monetize its relief excepted it as a “claim”under the Bankruptcy Code. The claim was denied an administrative priority because it arose from a rejected pre-petition agreement. Therefore, it was not a transaction between the creditor and debtor in possession benefitting the debtor-in-possession’s operations. The adopted District Court decision opined: “‘In general, only those costs incurred to cleanup property for which an estate has an interest in or owns may qualify as administrative expenses. . . .’clean-up costs arising from pre-petition activities not entitled to administrative expense priority’” Route 21 Associates of Belleville, Inc. v. MHC, Inc., 486 B.R. 75, 93 (S.D.N.Y. 2012)(Citations Omitted). Citing, In re Manville Forest, 209 F.3d 125, 120 (2d Cir. 2000), the Court concluded that “where debtor entered into pre-petition agreement, “[t]he fact that the contingency. . .—the environmental liability claim against [claimant]— materialized post-petition does not transmogrify the claim into a post-petition claim.”

Procedural context:

Appeal from District Court’s decision which denied a purchaser of contaminated property’s motion: a.) to compel the debtor-seller’s specific performance of a site remediation agreement; and b.) for an administrative priority for the creditor’s future clean up costs claim.

Facts:

Pre-petition purchaser of debtor's contaminated property sought to compel specific performance of purchase agreement's remediation terms where environment issues manifested themselves post-petition.and an administration claim for clean up costs

Judge(s):

ROSEMARY S. POOLER, GERARD E. LYNCH, CHRISTOPHER F. DRONEY,

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