The West Virginia company blamed for the massive leak that tainted water for hundreds of thousands of customers with has filed for bankruptcy, a move that will temporarily shield it from dozens of lawsuits.
According to the Insurance Journal, the chemical spill occurred earlier this month, and so far, the company has not given any possible explanation for what caused leak.
The West Virginia Gazette reported that the Department of Environmental Protection has revealed that Freedom Industries claims that about 10,000 gallons leaked from the Charleston plant, up from an initial estimate of about 7,500 gallons.
Freedom Industries 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.
The spill itself has become front-and-center of the state’s legislative session -- Gov. Earl Ray Tomblin announced plans to push for regulation of above-ground storage tanks and to require contingency plans for water companies. Other lawmakers are proposing specific measures to regulate and inspect storage facilities.
Meanwhile, West Virginia’s Congressional delegation, Sens. Jay Rockefeller and Joe Manchin, 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.
While no cause has been listed for the massive spill, Freedom Industries Inc. also used its bankruptcy papers as a forum to “hypothesize” about what caused the spill, according to the Insurance Journal. The company's assets and liabilities are approximately between $1 million and $10 million. Freedom Industries has at least 200 creditors and owes its top 20 creditors $3.66.
The bankruptcy proceedings temporarily halt the lawsuits against Freedom Industries, Charleston attorney Anthony Majestro told Insurance Journal Magazine. Majestro represents 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.
A head of the local business group, Charleston Area Alliance, said he couldn’t put a number on how much businesses had lost.
Despite the Chapter 11 bankruptcy filing, Washington, D.C., attorney and bankruptcy expert, H. Jason Gold, it will not preclude stall lawsuits against other parties targeted in the spill. According to the Insurance Journal, nor does the bankruptcy filing it frees Freedom Industries from its responsibility to rectify environmental damage caused by the spill, said Department of Environmental Protection spokesman Tom Aluise.
Mark E. Freedlander, an attorney with the law firm representing Freedom Industries, said in a statement that “the petition and related pleadings speak for themselves.”
Some of the lawsuits in Kanawha County Circuit Court against Freedom Industries also name West Virginia American Water Co. 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.
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 recent 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.
The water was tainted after the chemical later leaked through 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.