Environmental Protection Agency (EPA), Exide Bankruptcy, Lastest News

BREAKING NEWS: After EPA-driven revisions that would require regulators to be informed and clarification made that potential purchasers are responsible for remediation, judge allows Exide to sell or abandon contaminated properties without approval

The federal government challenged Exide’s request earlier this week on behalf of the Environmental Protection Agency, saying that while the proposed sales process might be fine in most bankruptcies, it was troubling in a case in which the debtor owned upward of 60 potential contaminated properties.

At a hearing in Wilmington, Exide counsel announced that the parties had hammered out a revised plan that informs regulators of upcoming sales and spells out that potential purchasers are responsible for remediating any property they buy.

U.S. Bankruptcy Judge Kevin J. Carey gave his blessing to the revised sale procedures, though he noted that there may have been a simpler resolution.

“Why did you make the government work so hard for the insertion of language that you must have suspected I would have made you add anyway?” the judge joked. (Judge Kevin J. Carey also presided over Exide’s Chapter 11 case a decade ago.)

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Exide, EPA Settle Differences Over Planned Asset Sales

By Jamie Santo

Law360, Wilmington (August 15, 2013, 7:49 PM ET) — Bankrupt Exide Technologies got the green light Thursday to sell less-valuable assets without court approval after resolving objections of environmental regulators concerned that the process could let the battery maker unload contaminated properties without proper oversight.

The federal government challenged Exide’s request earlier this week on behalf of the Environmental Protection Agency, saying that while the proposed sales process might be fine in most bankruptcies, it was troubling in a case in which the debtor owned upward of 60 potential contaminated properties.

At a hearing in Wilmington, Exide counsel announced that the parties had hammered out a revised plan that informs regulators of upcoming sales and spells out that potential purchasers are responsible for remediating any property they buy.

U.S. Bankruptcy Judge Kevin J. Carey gave his blessing to the revised sale procedures, though he noted that there may have been a simpler resolution.

“Why did you make the government work so hard for the insertion of language that you must have suspected I would have made you add anyway?” the judge joked.

The Georgia-based battery giant entered court protection in June and filed the “de minimis” sales motion July 25 as a cost-effective method for liquidating nonessential assets.

Under the original terms, Exide could conclude any deal worth less than $500,000 without having to for court approval or inform any parties in the case, according to court documents. For sales between $500,000 and $5 million, they would have to let the U.S. Trustee’s Office, the creditors’ committee and certain other interested parties know.

The EPA, joined by regulatory agencies from 10 states, voiced concerns that it might not just be minor assets being sold, but larger properties whose value has degraded below the $500,000 threshold because of environmental contamination, according to an objection filed Monday.

The revised plan lowers the no-notice limit to $75,000 and requires that the agencies are informed of any deal between $75,000 and $1 million, Exide attorney James J. Mazza Jr. said.

Parties will be given two weeks to respond to any noticed sale, Mazza said. A deal that receives no objections in 14 days can go through without any further approval, and a mechanism is in place to resolve any opposed sale.

The approved sales motion also resolves a main concern of the regulators, who contended that the original wording made it appear that assets were being sold “free and clear” of any environmental responsibility on the buyer’s part, according to the objection.

Concerns over contaminated sites previously bubbled up in the case last month, when the feds and others challenged Exide’s $500 million financing package over terms they said could prevent the company from responding to environmental emergencies.

At a July 24 hearing, Judge Carey overruled their objections, finding that the loan agreement gave Exide enough flexibility to respond to any environmental disaster and nothing in the record suggested the company would act irresponsibly.

The judge, who also presided over Exide’s Chapter 11 case a decade ago, said the company had acted responsibly in terms of its environmental obligations then.

The Georgia-based company, one of the largest producers of lead-acid batteries for the industrial and transportation markets, sought court protection June 10 in the face of rising production costs, intense competition and reduced access to credit.

Exide is represented by Kenneth S. Ziman, J. Eric Ivester, Sarah M. Ward, Peter Atkins, Anthony W. Clark, Christine W. Kim and James J. Mazza Jr. of Skadden Arps Slate Meagher & Flom LLP.

The case is In re: Exide Technologies, case number 1:13-bk-11482 in the U.S. Bankruptcy Court for the District of Delaware.

–Additional reporting by Matt Chiappardi. Editing by Richard McVay.

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