C. Abandonment of Environmentally Damaged Property

Author:Roderick J. Wood
Profession:Faculty of Law. University of Alberta

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Federal and provincial environmental protection legislation gives environmental regulators the right to issue remediation orders to compel the clean-up of polluted property. If the environmental damage is extensive, the costs of clean-up may be in excess of the value of the property. Compliance with the remediation order in such cases will diminish the value of the assets available to the other creditors who claim in the bankruptcy. In this respect, the property can be viewed as having a negative value.

The trustee is given the ability to abandon the environmentally damaged property.94If this is done, the trustee is not required to comply with a remediation order. The trustee must elect to abandon the property by giving notice to the authority that issued the order. Unless some other period is specified in the order, the election to abandon must occur within ten days after the order is made. If the order was in effect before the trustee’s appointment, the trustee is given ten days following the appointment to make an election to abandon the property. Alternatively, the trustee may apply to court within the applicable time period for a stay of the order to allow the trustee to contest the order or to assess the economic viability of complying with it. A decision by the trustee to abandon the property does not mean that the clean-up costs are unrecoverable. The costs of remediation form a charge on the polluted property and any contiguous property, and have priority over any other mortgage or charge.95If the costs of remediation exceed the value of this property, the environmental authority can claim the costs

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