Does the equitable right of an individual, whose property has been damaged by the debtor’s pollution, to injunctive clean-up relief constitute a “claim” that may be discharged in the debtor’s Chapter 11 bankruptcy? This was the issue of first impression which the Pennsylvania Bankruptcy Court dealt with in Krafczek v. Exide Corp., No. 00-1965, 2007 WL 1199530, at *1 (E.D. Pa. Apr. 19, 2007). The Krafczek court answered the question in the affirmative, 2007 WL 1199530 at *3, setting new precedent in an already narrow area of Bankruptcy Law upon which other courts had trodden carefully.
This article has four parts. The first part provides a brief overview of the Bankruptcy Code’s definition of the term “claim.” The second part examines the leading cases dealing with injunctive environmental clean-up orders, with particular focus on how these cases helped carve out an exception to the Code’s “claim” definition for certain injunctive clean-up orders. The third part discusses Krafczek (citations omitted), its decision to restrict individuals from being able to access the injunctive clean-up order remedy, as well as the court’s rationale behind that decision. The article concludes with a few brief thoughts on how Krafczek could have been similarly decided without reaching as far as it did, as well as on the burden that its holding places on individuals.