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Ohio v. Kovacs - 469 U.S. 274, 105 S. Ct. 705 (1985)

Rule:

There is no indication in the language of 11 U.S.C.S. § 101(4)(B) that the right to performance cannot be a claim unless it arises from a contractual arrangement. It is apparent that Congress desired a broad definition of a "claim" and knew how to limit the application of a provision to contracts when it desired to do so. 

Facts:

Petitioner State of Ohio obtained an injunction in state court ordering William Kovacs and other defendants to clean up a hazardous waste disposal site. When the injunction was not complied with, the State obtained the appointment in state court of a receiver, who was directed to take possession of the defendants' property and other assets and to implement the injunction. The receiver took possession of the site but had not completed his tasks when Kovacs filed a personal bankruptcy petition. Seeking to require part of Kovacs’ post-bankruptcy income to be applied to the receiver's unfinished tasks, the State filed a motion in state court to discover Kovacs’ income and assets. At Kovacs’ request, the Bankruptcy Court stayed these proceedings. The State then filed a complaint in the Bankruptcy Court seeking a declaration that Kovacs’ obligation under the state injunction was not dischargeable in bankruptcy because it was not a "debt" or "liability on a claim" within the meaning of the Bankruptcy Code. For bankruptcy purposes, a debt is a liability on a claim. Section 101(4)(B) of the Bankruptcy Code in pertinent part defines a claim as the "right to an equitable remedy for breach of performance if such breach gives rise to a right of payment, whether or not such right to an equitable remedy is reduced to judgment, fixed, contingent, matured, unmatured, disputed, undisputed, secured, or unsecured." The Bankruptcy Court ruled against the State, as did the District Court. The Court of Appeals affirmed, holding that the State essentially sought from Kovacs only a monetary payment and that such a required payment was a liability on a claim that was dischargeable under the Bankruptcy Code.

Issue:

Did the obligation under the affirmative injunction to clean up the hazardous waste site constitute a "debt" or "liability on a claim" subject to discharge under the Bankruptcy Code?

Answer:

Yes

Conclusion:

The Court held that Kovacs’ obligation under the affirmative injunction to clean up the hazardous waste site constituted a "debt" or "liability on a claim" within the meaning of 11 U.S.C.S. § 101(4)(B), subject to discharge under § 727(b).

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