ELR Citation: ELR 20701
No(s). 99-4328 (7th Cir. Jun 27, 2000)

The court reverses a district court and holds that potentially responsible parties (PRPs) at a contaminated railroad yard may seek contribution under the Oil Pollution Act for cleanup costs from the successor to the bankrupt railroad that originally operated the railroad yard. The district court held that the bankrupt railroad's abandonment of its rail business constituted liquidation that eliminated any entity that might have been sued. The court first holds, however, that abandonment of the rail business was not the same thing as corporate liquidation. Corporations change lines of business frequently without liquidating, which is what happened here. During the bankruptcy, the original railroad operator quit the railroad business but retained substantial assets. The corporate entity was renamed at the close of the bankruptcy and avowedly was a continuation of the original firm, rather than the buyer or distributee of the original operator's assets. Thus, the original operator did not liquidate, but restructured its debt in a classic reorganization. The court next holds, therefore, that the PRPs may proceed with their contribution claims. As the successor to the railroad that owned or operated the railroad yard at the time of its contamination, the successor bears the railroad's liabilities. The court additionally holds, however, that on remand the court must consider whether the successor is entitled to protection under the bankruptcy injunction.

Counsel for Appellee
Constantine L. Trela
Sidley & Austin
Bank One Plaza
10 S. Dearborn St., Chicago IL 60603
(312) 853-7293

Counsel for Appellants
Jennifer P. Kotler
Latham & Watkins
Sears Tower
233 S. Wacker Dr., Ste. 5800, Chicago IL 60606
(312) 876-7700

Before Wood and Evans, JJ.