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Closing a finishing facility - legal questions

Q. I have client I consult with who runs a plating shop in NY state.

Business is poor for a long while now & they are considering their options:

Option #1 is just to stick it out and hope things get better -- they are in decent shape financially with no debt but losing money monthly.

Option #2 is to liquidate and close without declaring a bankruptcy. There are enough funds in the business to pay all creditors in full, except the landlord. There are 4 years left on the lease. Total due over 4 years = approx. $600,000. They are considering offering the landlord a one time lump sum payment of approx. $20,000-$30,000 in order to get out of the lease and then they will agree to stay for a few months and clean out & close building. In this case my client at least ends up owning all assets, like equipment (probably worth nothing) and book of sales (probably worth something).

Option #3 LAST RESORT is bankruptcy. Question: The owners have not signed for anything personally, including the lease, but are wondering, what happens if they do not have enough funds to actually close the facility -- i.e., remove all tanks and chemicals. Does it become the landlords' responsibility, or does something environmental like this pierce the corporate shield and the regulatory agencies will come after the owners personally?
I been told facility is clean and always been in compliance with all regulatory laws.

Hopefully my client chose Option #1 and everything will work out for the best, but would like some answers to make educated decision.

Dave Higgins
consultant - San Diego, California, USA
October 6, 2009

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This question needs to be posed to an environmental attorney. Any unwanted chemicals, and residues therefrom will have to be removed and disposed as hazardous waste. Even in the cleanest shops there will be much contaminated equipment and building structures. It would not be unheard of that the entire building would have to be destroyed. Cleanup will NOT be inexpensive. If the corporation is bankrupt and unable to pay, then the owners personally and the building owner are possibly liable. It is a complex question, certainly beyond the technical experts on this forum. Get a lawyer involved, sooner rather than later. Jeffrey Holmes, CEF Spartanburg, South Carolina October 9, 2009 I'm not a financial expert, nor an attorney... but do know a bit about environmental regulations. Bottom line is, the owners of the business will be 100% liable for any clean-up that has to be done should they choose option #3. Rest assured that the EPA will come after them for every dime they have to facilitate the clean up. If they don't have enough funds to cover that, the rest could be picked up by Joe Q. Taxpayer. And w/o knowing all the details, criminal charges could be filed as well. You simply can't abandon plating lines, and expect to walk away scot free. Marc Green anodizer - Boise, Idaho October 10, 2009

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I do agree with Jeffery that if the business is going to fail, an attorney should be contacted. I would imagine the clean-up costs would 1st go to the business owner, then perhaps the building owner, and if that isn't satisfied, to you and I.

Marc Green
anodizer - Boise, Idaho
October 12, 2009

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Thank you all for answers so far - just some more info - shop does do no plating at all - it is all anodize - they inform me 5 years ago they close another facility & building sold & environmental checks were all done by bank & all no problem - they tell me this building is even cleaner - no environ issue.

If corporation out of money & go bankrupt & nothing is sign for personal, than can they be held personally for cleanup? I think that what corporate shield for?

They not own building - they have landlord.

Thank you much

Dave Higgins
- San Diego, California
October 20, 2009

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Hi, Dave. This has evolved into a question for a California-based attorney. Good luck.

Regards,

Ted Mooney, P.E.
Striving to live Aloha
finishing.com - Pine Beach, New Jersey
October 21, 2009