ELR Citation: ELR 20023
No(s). 89-11-119M (Bankr. W.D. Ark. Sep 20, 1990)

The court upholds the Environmental Protection Agency's (EPA's) objection to confirmation of a debtor's liquidation plan that would require EPA to accept conveyance of land that may be contaminated. After voluntarily filing for relief under Chapter 11, debtor proposed a liquidation plan for confirmation that would pay EPA, after payment of administrative claims, all funds generated from an existing lease on the 34-acre tract of land, which is debtor's major asset, or the sale of the property. EPA, which had issued debtor an administrative order stating that the debtor's land was polluted and that debtor could be liable for cleanup costs, had not rendered a final decision on the debtor's liability at the time of the confirmation hearing, and thus held an unliquidated disputed claim in an unknown amount. At the confirmation hearing, EPA objected to confirmation of the plan, claiming that a plan cannot require EPA to receive title to real estate over its objection. The court holds that a creditor cannot be required to accept worthless real property in satisfaction of a potential post-petition unsecured claim. The evidence reflects that the debtor's property has no value other than a nominal monthly rental value, due to its potentially contaminated condition, and because EPA has no security interest in the property or judgment against the debtor, the debtor's plan must be modified.

Counsel for Debtor
Charles Baker
Rose Law Firm
120 E. Fourth St., Little Rock AR 72201
(501) 375-9131