Vanderbilt Journal of Transnational Law

First Page



This Note focuses on current environmental bankruptcy law in the United States. It analyzes the claims of a state against a corporate polluter when the corporation discharges a toxic substance in violation of the state's environmental laws, refuses to clean up the waste, and then files bankruptcy in lieu of paying for the cleanup.

This Note analyzes the court decisions subsequent to the United States Supreme Court opinions in Ohio v. Kovacs and Midlantic National Bank v. New Jersey Department of Environmental Protection to evaluate the current status of United States bankruptcy law on the issues of the automatic stay; abandonment of the contaminated property by the bankruptcy trustee; the potential for the state to get an administrative expense priority in the bankruptcy distribution if it has to fund the clean up of the property; and the potential for the corporate debtor to obtain a discharge.

The Note then examines the possibility that a foreign state parent corporation will be held liable for its subsidiary corporation's environmental debts and obligations in the state where the subsidiary is located. The Note reviews several cases to determine whether it is appropriate to use traditional corporate veil piercing doctrines in the environmental bankruptcy context.

The Note concludes that a unified multinational effort is the necessary response to the pervasive international environmental problems. When a parent corporation's foreign subsidiary violates the foreign state's environmental laws, that jurisdiction should be able to pierce the corporate veil and reach the assets of the culpable parent corporation. State laws should explicitly allow this and courts should enforce piercing by recognizing foreign court judgments that order the parent to take responsibility for its subsidiary's debts.