Reviewing Redwater: An Analysis of the U.S. and Canadian Approaches to Environmental Obligations in Bankruptcy
by | posted in: Bankruptcy Administration and Jurisdiction, Bankruptcy Roundtable Updates, International and Comparative | 0

By Laura N. Coordes (Associate Professor of Law, Arizona State University – Sandra Day O’Connor College of Law)

Laura N. Coordes

The United States and Canada have both seen significant litigation over the treatment of environmental obligations in bankruptcy proceedings. Both countries also have robust regulatory and statutory frameworks with respect to bankruptcy and environmental law, making the two jurisdictions ripe for comparison.

Although the U.S. legal landscape differs somewhat from Canada’s, courts in both countries have struggled to sort out the treatment of environmental obligations in bankruptcy. However, in 2019, the Supreme Court of Canada decided Orphan Well Association v. Grant Thornton Limited (“Redwater”), which characterized environmental obligations, not as claims, but as duties owed to the public that could not be compromised in bankruptcy. Meanwhile, U.S. courts continue to grapple with the question of how to treat a company’s environmental obligations in bankruptcy.

This article analyzes the impact of Redwater and highlights issues that U.S. scholars and policymakers should consider as they press for changes. In particular, the article focuses on three questions: (1) What is the role of the legislature as compared to the judiciary? (2) What is the role of federal law, as compared to provincial or state law? and (3) What is the role of the public interest?

These three questions implicate debates that go beyond the immediate issue of the role of environmental law in bankruptcy proceedings. However, considering environmental and bankruptcy law in light of these universal issues illuminates unresolved tensions that both the U.S. and Canada will likely continue to face on a larger scale.

The full article is available here.

Bespoke Bankruptcy
by | posted in: Bankruptcy Roundtable Updates | 0

By Laura N. Coordes (Associate Professor of Law, Sandra Day O’Connor College of Law)

Laura N. Coordes

The U.S. Bankruptcy Code is the primary source of bankruptcy relief for debtors in the United States. But it is not the only source. Over the years, Congress has occasionally created bespoke bankruptcy—customized debt relief designed for a particular group of debtors. Bespoke bankruptcy may provide desperately needed bankruptcy relief to entities that are ineligible or otherwise unable to access bankruptcy through the Bankruptcy Code. But bespoke bankruptcy is also fraught with difficulties. To what extent should bespoke bankruptcy be used or developed instead of the Bankruptcy Code?

In Bespoke Bankruptcy (forthcoming in the Florida Law Review), I take up this question. The Article begins by acknowledging the limitations of the Bankruptcy Code and highlighting instances where Code-based bankruptcy relief does not work. Some entities, which I term “bankruptcy misfits,” require such different relief mechanisms that using the Bankruptcy Code becomes difficult, impractical, or even impossible. To assist these entities, Congress has historically chosen either to amend the Bankruptcy Code or to create alternative debt relief processes through statutes outside of the Code. The Article then examines the extent to which bespoke bankruptcy, as opposed to Code amendments, should be used to provide other bankruptcy misfits debt relief.

To address this question, the Article devises a framework that policymakers can use to decide when and how to implement bespoke relief. In so doing, this Article sets the stage for a new direction in bankruptcy law and theory: one where bespoke bankruptcy performs a limited, but critical, role in providing relief to entities that the Bankruptcy Code either does not or cannot assist.

The full article is available here.