Freedom Industries Bankruptcy Over West Virginia Chemical Spill

Freedom Industries Storage Tanks

Freedom Industries Inc. filed Chapter 11 bankruptcy on Friday after more than 20 lawsuits had been filed as of Thursday, the day before. The lawsuits are over the chemical poisoning of virtually the entire water supply of Charleston, W.Va., The key document in the filing is here. The question of compensation for the aggrieved residents and businesses of Charleston will now be in the hands of the bankruptcy court.

Freedom Industries gross revenues in 2013 came to $30.7 million, which may not be enough to make a dent in the potential claims. The court will have to sort out who should stand in line, and where. But the filing also places Freedom's assets out of the reach of the people and businesses of Charleston, at least for now.

Freedom Industries changed hands barely one month before the Jan. 9 chemical spill that befouled the Charleston water system. The new owner is identified as Chemstream Holdings, which Barrett identifies as a corporate arm of J. Clifford Forrest, a major figure in the Pennsylvania mining business. Forrest has asked the court to allow him to lend Freedom $5 million to keep operating, money that presumably will be kept out of the clutches of the Charleston claimants.

In the bankruptcy filing, Freedom also previewed its finger-pointing defense strategy, suggesting that the cause of the leak was inadequate upkeep of a water company line that ran under the breached chemical tank. The hunt for the deepest pocket thus begins.

A poisonous but unregulated chemical leaked out of a Freedom tank and into the Elk River, which provides drinking water for 300,000 Charleston residents from an intake downstream of the chemical tanks. Authorities advised residents and businesses to cease using the water for anything but flushing. No drinking, no bathing, no washing dishes. The effect on daily life isn't hard to imagine. The all-clear wasn't sounded for five days, and in some parts of town residents still report a chemical odor.  (Los Angeles Times, 1/20/2014)