Search AOL Mail
AOL Mail
AOL Favorites

Company files for bankruptcy after W.Va. spill

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 them from dozens of lawsuits, most by businesses that were forced to shut down for days.

Freedom Industries Inc. also used its bankruptcy papers as a forum to speculate on how the spill might have happened.

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 began.

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.

The bankruptcy filing doesn't stall lawsuits against other parties targeted in the spill, said Washington D.C. attorney H. Jason Gold. Nor does it strip Freedom Industries' 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, the company also gives a possible explanation for what caused the spill: Freedom Industries says a 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 its side, causing it to leak.

The water was tainted after a chemical used to clean coal leaked from a storage tank and then a containment area at a facility owned by Freedom Industries. The water ran into the Elk River, contaminating the state's largest water system.

After the spill, residents in a nine-county area around the state capital of Charleston were told not to use the water for anything other than flushing toilets. Some businesses and schools were forced to close for several days. The water restrictions have since been lifted for most residents.

The spill has become the focal point of the state's 60-day lawmaking session, which started the day before last Thursday's spill. Gov. Earl Ray Tomblin announced plans Friday to push for regulation of above-ground storage tanks. He also wants to require contingency plans for water companies. State Sen. John Unger, D-Berkeley, has spelled out specifics to regulate and inspect storage facilities in SB 373.

In Congress, Sens. Jay Rockefeller and Joe Manchin, both West Virginia Democrats, have introduced a bill requiring state inspections of above-ground chemical storage facilities, letting states recoup costs for emergency responses and setting industry standards for emergency responses. Sen. Barbara Boxer, D-Calif., is also a bill sponsor.

Government entities ranging from the U.S. Attorney's Office to a West Virginia legislative panel on water resources are investigating the spill.

The terminal that leaked had not been inspected by state officials since 2001, when it was owned by a different company operating under more stringent rules. State officials said Freedom Industries bought the terminal last month, though the firm has long been tied to the property.

Freedom bought the terminal from Etowah River Terminal LLC, a company that Freedom formed the purpose of buying the terminal site, according to a 2005 court filing. State records show the former president of Freedom Industries was listed as the manager of Etowah.

A spokeswoman for Gov. Earl Ray Tomblin did not answer a phone call for comment.

Join the discussion

1000|Char. 1000  Char.
STARMAN January 18 2014 at 12:19 PM

Company president Gary Southern should be in jail. Why is he walking around?

Flag Reply +1 rate up
rockin cain January 18 2014 at 2:51 PM

I'd rather put people out of a job, than into a coffin.

Flag Reply +1 rate up
rockin cain January 18 2014 at 2:48 PM

If it wasn't for the people ,they would have never fessed up to it.

Flag Reply +1 rate up
cvanac8550 January 18 2014 at 2:36 PM

Ok a bill requiring state inspections..great ...only that the first thing that will be cut when the states trim their budget will be funding for these inspections.....and don't you think the polititions who sponcered the bill know it.......yeah we are all getting hip to their game in Washington.....

Flag Reply +1 rate up
gdloops18 January 18 2014 at 10:19 AM

State prosecutors should follow where the MONEY went, before they filed for bankruptcy, then FREEZE it. Meantime, put in 'blanket' claims against Freedom Industries Insurance for the People of W.Va., to help offset the pain and suffering due to come.

Flag Reply +1 rate up
1 reply
ehamlin906 gdloops18 January 18 2014 at 10:39 AM

Some of it's money went to GOP campaign coffers, like Boehner's. Typical, isn't it. They also owe quite a bit in Federal Taxes too. Bet they have plenty of bought connections who will be protecting them instead of the taxpayers who will bear the cost of the cleanup as well as the cost of the contamination in the event this chemical can cause health problems. Thank the Koch brothers for this.

Flag Reply +2 rate up
spectrumprodec2 January 18 2014 at 10:25 AM

So any company that could possible destroy the environment, kill or harm many people and destroy a natural resource can be protected by Bankruptcy?

Flag Reply +6 rate up
1 reply
Paul Carson spectrumprodec2 January 18 2014 at 10:36 AM

You are very wrong-You read to many comic books!

Flag Reply 0 rate up
spectrumprodec2 January 18 2014 at 10:28 AM

got chemical companies in your local vicinity? Better consider the outcome of this incident.

Flag Reply +5 rate up
eulerckt January 18 2014 at 10:30 AM

Promptly filed for bankruptcy? Probably there is some criminal/blatant negligence involved that could result in management 'sequestration' if discovered. Bankruptcy will buy time to hide any evidence they still hold.

Flag Reply +4 rate up
andersonda54 January 18 2014 at 2:34 PM

oh and all of the city water and well water where you live is 100%clean huh ,and you all believe who that tells you it is ,and you will tell who about it if it isnt ,and wo will put a stop to it. is this before or after

Flag Reply +2 rate up
weinerbobmar January 18 2014 at 10:15 AM

The Joke is that the water you drink comes from a river that flows through your state and the water company and the state don't care if you crap or pee in the river just don't clog the pipes. Every one of the companies with tanks on a river or waterway should be shut down, inspected and cleaned up. I had contracts with tank farms in NJ and NY. Some had retaining walls for minor leaks but if a tank ruptured the EPA would be out making reports. The mentality is wait for something to happen.

Every resident in every community needs to know what little ol thing could cause a disator in the community even if it's inspected and approved to operate. Folk, wake up and stop thinking your totaly safe because nothing has happened in 20 years.
Blame your water company and your town for not inspecting, That plant should have been closed years ago. Look at the weed theory, if the grounds are not kept up and weeds are growing around fences, if the fences are rusty and damaged and pot holes in the roads it's a site that will have problems. If a company cannot maintain the grounds they are most likley to cheap to maintain the equipment.

Flag Reply +2 rate up
aol~~ 1209600


More From Our Partners