Company files for bankruptcy after W.Va. spill

Published on NewsOK Modified: January 17, 2014 at 11:32 pm •  Published: January 17, 2014
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CHARLESTON, W.Va. (AP) — The company blamed for a chemical spill that left 300,000 West Virginians without safe drinking water filed for bankruptcy Friday, temporarily shielding it from dozens of lawsuits, many by businesses that were forced to shut down for days.

Freedom Industries Inc. also used its bankruptcy papers as a forum to hypothesize about what caused the spill.

The company filed a Chapter 11 petition with the U.S. Bankruptcy Court in the Southern District of West Virginia, eight days after the spill was discovered.

Company president Gary Southern signed the paperwork, which lists both the company's assets and liabilities as being between $1 million and $10 million. It says the company has at least 200 creditors and owes its top 20 creditors $3.66 million.

The bankruptcy proceedings temporarily halt the lawsuits against Freedom Industries, said Charleston attorney Anthony Majestro, who is representing several small businesses that sued the company. Majestro said his clients are weighing an option to petition the court to proceed in hopes of collecting on Freedom's insurance policy. It depends on the company's level of coverage, Majestro said.

Matt Ballard, president of the local business group Charleston Area Alliance, said last week he couldn't put a number on how much money businesses had lost.

The bankruptcy filing doesn't stall lawsuits against other parties targeted in the spill, said Washington, D.C., attorney H. Jason Gold, a bankruptcy expert who is not involved in the pending lawsuits. Nor does it free Freedom Industries from its responsibility to rectify environmental damage caused by the spill, said Department of Environmental Protection spokesman Tom Aluise.

Some of the lawsuits in Kanawha County Circuit Court against Freedom Industries also name West Virginia American Water Company and Eastman Chemical, the producer of the coal-cleaning chemical that spilled. Freedom Industries also owes the Tennessee-based company $127,475, bankruptcy documents show.

Mark E. Freedlander, an attorney with the law firm representing Freedom Industries, said in a statement Friday that "the petition and related pleadings speak for themselves."

According to bankruptcy documents, Freedom Industries is wholly owned by Chemstream Holdings, Inc., a company located at the Pennsylvania headquarters of Rosebud Mining Company.

In the documents, Freedom Industries also gives a possible explanation for what caused the chemical leak. The company said a nearby water line burst during last week's frigid temperatures, the ground beneath a storage tank froze, and some kind of object punctured a hole in the tank's side, causing it to leak. The document says "It is presently hypothesized" that this is what caused the leak.



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