The insolvent metal processing company, Timminco, is attempting a new twist to “cleanse” creditors of environmental claims through insolvency law. They have applied to the Commercial List for permission to sell their valueless contaminated sites, for virtually nothing, to new subsidiaries, which will then immediately declare bankruptcy. The contaminated assets will thereby be transferred to the provincial government, freeing up more money for other creditors. Meanwhile, the environmental work urgently needed at the contaminated sites will be abandoned, unless taken over by the province. Among other things, the contaminated sites pose a threat to a nearby creek and the Ottawa River:
“The mining activities left a quarry which fills naturally with water whose alkalinity is elevated due to leaching from the exposed rock and from the nearby tailings pile – pending development of a means of mitigating the run-off issue, Timminco has been pumping water from the quarry and treating it to reduce its alkalinity prior to its discharge into a nearby creek which flows into the Ottawa River.”
This is yet another of the flood of cases in which leveraged buyouts, lax environmental regulation (especially inadequate financial assurance) and the financial crisis have combined to create short term profits and long term environmental harm as contaminated sites across the country are abandoned. Insolvency cases always involve allocating pain to those who are more or less innocent, and frequently involve leaving environmental work undone, given the priorities set by the federal government for insolvencies. I admit, though, that the Timminco manoeuvre seems particularly cold blooded. The Ministry of the Environment must be furious.