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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.

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Penny Narisa Ros January 18 2014 at 11:29 AM

good try now put these ******** in jail for gross negugence and what ever else you can throw at them

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1 reply
msggov Penny Narisa Ros January 18 2014 at 12:02 PM

Harsh without knowing all the facts. What about the federal inspectors who where negligent? What about the local inspectors? Where they cited before the accident? The news only gives you a thumb nail sketch and not all the facts.

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2 replies
gibby1208 msggov January 18 2014 at 12:16 PM

What you fail to understand is that inspectors only report infractions. It is up to the government to enforce the law. That's where the GOP steps in and gives these environmental destroyers a free pass. Ironically, the many of the victims of this latest atrocity voted for the the very people that allowed it to happen. All chanting the anti-regulation mantra, fed to them by the corporate owned GOP.

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jmpplustwo msggov January 18 2014 at 12:38 PM

This type of storage company was not required to have federal inspection

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timalways January 18 2014 at 12:38 PM

The GOP deflector shield is at 100% today.

Flag Reply +2 rate up
al12exb January 18 2014 at 10:15 AM

Sneaky SOBS! Bankrupsy is everybodies excuse to get rid of debt, start again untile they get in debt again and file again if they can...what a shame!!!!!!!!!!!!!!!!!!

Flag Reply +6 rate up
canienaga January 18 2014 at 1:11 PM

I was watching a news show last night that showed where Freedom Industries assets were immediately bought by another company which would normally protect the assets from lawsuits. However, it appeared that the owner of the new company "might" be the same person as the owner of the old company. If this is the case then the corparate veil of the new company can be pierced and the assets recovered. I shall be following this with interest.

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prodriverlimoman January 18 2014 at 12:09 PM

corporations can get away with just about anything the laws should be changed so that the top brass will also be responsible. Money talks and the poor man walks. Just look at the drunk kid who killed 4 people and only got a slap on the hand it was called afulenza I call it bulls##t.

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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.

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cincyburb01 January 18 2014 at 5:49 PM

I was never a fan of the concept of bankruptcy protection, and this article just reinforces my dislike for the bankruptcy concept. Bankruptcy protects scumbags, and the whole thing should be outlawed.

Flag Reply +4 rate up
3 replies
dutchhollo January 18 2014 at 10:12 AM

Who ever said "Crime does not pay"? Man they will do anything to escape responsibility and accountability.

Flag Reply +7 rate up
rockin cain January 18 2014 at 2:21 PM

Whos worried about terriost, we are being destroyed from within.

Flag Reply +2 rate up
vancurren January 18 2014 at 10:03 AM

Ah yes, pollute the waters and run for cover under the protection of bankruptcy laws.

Flag Reply +6 rate up
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