Wednesday, June 22, 2011

Greif Industrial Packaging v. R. Sharp, III

Jun 21: In the U.S. Court of Appeals, Fifth Circuit, Case No. 10-30387. Appealed from the United States District Court for the Eastern District of Louisiana. In this unpublished decision, the dispute concerns the proper interpretation of an asset purchase agreement between a Chapter 11 debtor and the company that purchased it out of bankruptcy. The Appeals Court said, "We affirm the judgment of the district court with respect to the holdback claims for environmental liabilities and the Ingersoll-Rand industrial equipment. We reverse and remand the judgment of the district court with respect to the Lexington insurance premium.   

    Evans Industries, Inc., (Evans) operated a series of five leased facilities in Louisiana and Texas that manufactured, filled, warehoused and distributed steel drums and industrial containers. Evans filed a Chapter 11 petition in April 2006, and the bankruptcy court confirmed the reorganization plan in October 2006. The plan formed a Distribution Trust of Evans Industries (the Trust) and allocated most of Evans's assets to that Trust. R. Patrick Sharp, III was appointed Trustee. In November 2006, on the plan's closing date, Greif Industrial Packaging (Greif) entered into an asset purchase agreement (APA) with Evans.   

    After Greif took over the facilities, it made two disputed claims against the "holdback" fund. First, it claimed $649,633.75 in expenses it incurred removing and disposing of hundreds of barrels of environmentally hazardous waste left behind by Evans at four of the five sites. Second, it claimed $10,452.06 for payments it made to a third party, Ingersoll-Rand, for five pieces of industrial equipment ("Bobcat loaders") that Evans had purchased but not yet fully paid off. Added up, the disputed holdback claims totaled $660,085.81. The bankruptcy court ruled for the Trustee and against Greif as to the holdback amounts and the utility deposits, but ruled for Greif as to the setoff claim for the prorated insurance premium. The parties cross-appealed as to the holdback issues and insurance premium setoff.
    On the environmental issues, the Appeals Court said, "After taking possession of the business premises and assets, Greif spent nearly $650,000 to remove and properly dispose of hundreds of barrels of hazardous waste left behind by Evans at several sites. It is not disputed that this cleanup complied with applicable government environmental regulations. Greif attempted unsuccessfully to claim that amount from the holdback. Greif argues on appeal that Evans breached its warranty that the facilities complied with all relevant environmental regulations, and, in the alternative, that the bankruptcy court and district courts misread the relevant portion of the APA in which Evans retained responsibility for environmental cleanup costs that accrued prior to the APA. We reject Greif's contentions."

    Access the complete opinion (click here). [*Remed]

For a limited time period you can access today's complete issue of eNewsUSA without the links

1 comment:

Testing User said...

All the information included on industrial packaging are very well collected and shared.

Find our site