Under-Insured and Incompetent—Company Behind West Virginia’s Chemical Spill Files For Bankruptcy


BY JEFF SPROSS

Elk River Chemical Spill

CREDIT: AP PHOTO/TYLER EVERT

According to the Charleston Gazette, Freedom Industries filed for Chapter 11 bankruptcy today.

On January 10, a tank owned by Freedom spilled 7,500 gallons of 4-Methylcyclohexane Methanol (MCHM) — a chemical used to wash coal of its impurities — into West Virginia’s Elk River. As a result, over 300,000 people in the state were left without drinking water for almost five days, and numerous reports of illnesses possibly related to the spill are already filtering in.

According to an anonymous source close to the company who spoke to the Gazette, they believe the spill may have been caused by a broken pipe that allowed water to flow under the tanks. The water then froze, splitting the tank open from below. The tanks were surrounded by a retaining wall — which state officials had described as “shoddy” — but they were sitting on gravel, allowing the chemical spill to leach into the ground below.

Freedom’s filing lists $1 to $10 million in assets, $1 to $10 million in liabilities, and 200 to 999 creditors.

As of Thursday, at least 20 lawsuits had been filed against Freedom Industries over the leak. The company reportedly lacks an umbrella insurance policy, and what coverage it does have is “inadequate to cover the amount of claims in this case.”

“Under the bankruptcy code,” the Gazette reports, “Chapter 11 permits a company to reorganize and continue operating.” Chapter 11 also requires all creditors to stop all collection attempts.

As this case winds its way through the court system, the public process will give West Virginians a very good sense of what was going on behind the scenes of this company that has caused to much disruption in their lives.


This material [the article above] was created by the Center for American Progress Action Fund. It was created for the Progress Report, the daily e-mail publication of the Center for American Progress Action Fund. Click here to subscribe.

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One thought on “Under-Insured and Incompetent—Company Behind West Virginia’s Chemical Spill Files For Bankruptcy

  1. Catherine Fowler 2014-01-17 / 21:01

    The cowards are trying to protect themselves from backlash.

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