In re Resource Technology Corp.

Congress Development Company (CDC) owned and operated a landfill near Chicago. In 1996, CDC hired Resource Technology Corporation (RTC) (debtor) to build a gas-collection-and-control system for the landfill. The system deteriorated over the years, but RTC had no money to fix it. In 1999, RTC entered Chapter 11 bankruptcy proceedings. In 2002, Samuel Roti (creditor) bought a hotel next to CDC’s landfill. In September 2005, RTC’s Chapter 11 bankruptcy was converted to a Chapter 7 liquidation. A trustee was appointed and given operational control over RTC’s business until the liquidation was complete. Four days after the trustee received control, the gas-collection-and-control system at CDC’s landfill failed. Gas odors wafted into Roti’s hotel, causing guests and employees to become sick. Illinois’s state environmental-protection agency issued notices of violations to RTC and CDC, but RTC’s trustee responded that there was no money in RTC’s bankruptcy estate to repair the gas-collection-and-control system. CDC terminated its relationship with RTC in January 2006, and the trustee abandoned all of RTC’s assets at the landfill the following month. Roti eventually sold the hotel for $5 million but claimed that he could have sold the hotel for nearly $25 million without the gas odors. Roti asserted an administrative claim in RTC’s bankruptcy case for the difference between the sale price and the price that Roti allegedly could have obtained for the hotel. The bankruptcy court rejected Roti’s claim, and the district court affirmed. Roti appealed.