The ABC and Environmental Liabilities: When Cleanup Costs Complicate Wind-Down

Businesses with environmental contamination on their property face a particularly complex ABC. Environmental cleanup obligations don’t disappear in an assignment — they follow the assets.

Environmental Liability in the ABC

If the business owns or leases contaminated property, the assignee inherits the cleanup obligation along with the asset. Selling contaminated property requires disclosure and typically a price reduction. The EPA and California environmental agencies have broad authority to pursue responsible parties — including assignees who control contaminated assets.

Environmental liabilities often exceed asset value. A manufacturing facility with serious contamination may have cleanup costs that dwarf the value of the land and building. An assignee who accepts the assignment without understanding the environmental liability may find themselves holding an asset with negative net value. Pre-assignment environmental assessment is essential for any business with industrial operations.

The California ABC System gives business owners and creditors the exact tools, templates, and step-by-step guidance to navigate an Assignment for Benefit of Creditors — faster and cheaper than bankruptcy. Request your free evaluation here.