Judge Rejects Freedom Industries Bankruptcy Plan

U.S. Bankruptcy Judge Ronald Pearson, in a 10-page order, said Freedom Industries' plan was not acceptable primarily because of "the unsettled terms of environmental remediation, a matter of highest priority in the case."

By Ken Ward Jr.
The Charleston Gazette

A federal judge on May 13 rejected the latest bankruptcy plan from Freedom Industries and ordered the company to focus on meeting state Department of Environmental Protection mandates about cleanup of the company's Etowah Terminal, site of the January 2014 Elk River chemical spill that contaminated drinking water for 300,000 area residents.

U.S. Bankruptcy Judge Ronald Pearson turned down a request from Freedom for an expedited status conference to discuss the company's growing dispute with DEP over remediation of the site and sided with an earlier objection from agency officials to a $6.7 million bankruptcy plan that would have set aside just $150,000 for future cleanup work.

Pearson, in a 10-page order, said that Freedom's plan was not acceptable primarily because of "the unsettled terms of environmental remediation, a matter of highest priority in the case."

"Remediating the ongoing threat to public safety through contamination of the region's water supply is essential ... both because another incident of water contamination would consume [Freedom's] resources, and because the WVDEP police powers and enforcement capabilities could tie up all [Freedom's] assets if the WVDEP deemed there was a continued threat to public safety and health," the judge wrote. Pearson questioned whether Freedom's latest plan obtains enough money from former Freedom officers and owners to pay off the company's debts and fund cleanup activities.

Freedom's proposed plan, filed on April 30, would distribute about $2.7 million to spill victims and $500,000 to other Freedom creditors and pay off the company's tax debts, but also set aside $2.2 million for payments -- subject to court approval -- for lawyers, consultants, and other professionals for work through February 2015 processing the case. Another $400,000 is estimated for payments to professionals for work since March 1. Those payments, though, would need to be approved by Pearson, who has repeatedly complained about what the judge said were excessive billings from professionals.

Funds for the plan would come from Freedom's previously reached $3.2 million settlement with its insurance company and from a $2.8 million payment from former Freedom owners and officers, along with an additional $300,000 payment from former Freedom President Gary Southern.

"While the court does not make a definitive finding, it seems clear that those responsible for overseeing the storage of potentially hazardous materials were less vigilant than required over several years with respect to these responsibilities prior to the spill incident at the Etowah River Terminal," the judge wrote. "This has resulted in criminal charges against these parties. The settlement amounts barely scratch the surface of the damages resulting from conditions existing during their stewardship."

The judge's order comes less than a day after Freedom's chief restructuring officer, Mark Welch, had filed a new statement with the court, trying to propose a compromise with DEP that would have provided $250,000 for short-term water treatment and soil disposal at the site while a broader agreement on long-term cleanup work could be negotiated.

DEP had harshly criticized Welch's April 30 bankruptcy plan, saying it put the interests of the company's bankruptcy lawyers and consultants ahead of funding an appropriate cleanup at the site.

(c)2015 The Charleston Gazette, www.wvgazette.com
Distributed by Tribune Content Agency, LLC

Download Center

  • Waste Management in 2021: Accelerate Your Success with Technology

    Join waste management experts on February 23rd for a live best practice session webinar. You’ll learn how to take your waste program to the next level with visual location, barcoding, and mobility. Register now.

  • Green Quadrant EHS Software 2021

    Reserve your copy of the new report by independent analyst firm, Verdantix, to get a detailed, fact-based comparison of the 22 most prominent EHS software vendors in the industry.

  • Your Guide to Environmental Metrics that Drive Performance

    Translating sustainability into action starts with implementing the right metrics to assess your environmental risk and performance. Learn how to design metrics that improve your decision-making process and drive enterprise performance.

  • 5 Keys to Best-in-Class Chemical Management

    Running a safe chemical program is challenging and complex: from knowing what's on-site to proper handling and disposal - all while navigating regulatory changes. Learn the best ways to mitigate chemical risk, get the most value out of your data, and gain buy-in for a chemical management solution.

  • Unpacking ESG: 6 Questions You Were Too Afraid to Ask

    Environmental and Sustainability experts from Arcadis and Cority answer 6 of the most pressing questions EHS professionals have about getting started with Environmental, Social, and Governance (ESG) reporting.

  • Industry Safe