## Facts

- Chem-Dyne Corp. operated a hazardous-waste disposal facility in Ohio; the State sued Chem-Dyne and William Kovacs for environmental violations involving pollution and improper disposal.
- The parties resolved the case through a state-court stipulation and order that enjoined further violations, required site cleanup, and required a $75,000 payment.
- Kovacs did not comply with the cleanup obligations.
- The state court appointed a receiver to take possession of defendants’ property and assets and to implement the cleanup injunction; the receiver took control of the site but cleanup remained incomplete.
- Kovacs filed a personal Chapter 11 bankruptcy petition.
- Ohio sought to discover Kovacs’s income and assets to fund cleanup; the bankruptcy court stayed those state-court discovery efforts.
- Ohio filed an adversary complaint in bankruptcy court seeking a declaration that the cleanup obligation was not dischargeable.
- Kovacs argued the case was moot because the Army Corps of Engineers removed industrial wastes using recovered funds; Ohio responded that toxic contamination remained in the ground requiring further remediation.

## Issues

1. Whether the dispute was moot given the Army Corps’ removal of industrial wastes from the site.
2. Whether the cleanup injunction, as pursued against Kovacs in bankruptcy, constituted a “debt” or “liability on a claim” under the Bankruptcy Code and was therefore dischargeable.

## Decision

- The Supreme Court held the case was not moot because Ohio alleged ongoing contamination and an unmet remediation obligation.
- The Court affirmed the Sixth Circuit, holding that Ohio’s post-receivership enforcement against Kovacs functioned as a demand for money to pay cleanup costs.
- Because the equitable remedy had, in substance, become a right to payment, it was a “claim” under the Bankruptcy Code and thus dischargeable.

## Legal Principles

- A bankruptcy “debt” is a liability on a “claim,” and “claim” is defined broadly to include a right to an equitable remedy for breach of performance when the breach gives rise to a right of payment.
- An injunction-based obligation can be treated as a bankruptcy claim when enforcement, in practical effect, seeks monetary payment rather than the debtor’s ongoing personal performance.
- A case is not moot when a party asserts continuing injury and remaining legally cognizable obligations, even if partial remediation has occurred through third-party efforts.

## Conclusion

The Court held that Ohio’s cleanup injunction, as enforced after a receiver took control and as pursued against Kovacs’s assets and income, amounted to a right to payment and therefore constituted a dischargeable claim in bankruptcy, while also rejecting mootness due to alleged continuing contamination.


Ohio v. Kovacs, 469 U.S. 274 (1985)