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Spill Prompts Bankruptcy

Company faces probes, dozens of lawsuits

January 18, 2014
The Intelligencer / Wheeling News-Register

CHARLESTON (AP) - The company blamed for a chemical spill that left 300,000 West Virginians without safe drinking water filed for bankruptcy Friday.

Freedom Industries Inc., facing at least 31 lawsuits and state and federal investigations after the Jan. 9 spill, filed a Chapter 11 petition with the U.S. Bankruptcy Court in the Southern District of West Virginia.

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.

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Facing dozens of lawsuits as well as investigations on the state and federal levels, Freedom Industries has filed for bankruptcy following last week’s chemical spill in Charleston.

The bankruptcy proceedings freeze the lawsuits against Freedom Industries, said Charleston lawyer 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. lawyer H. Jason Gold.

Some of the 31 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, a lawyer with the law firm representing Freedom Industries, said in a statement Friday that "the petition and related pleadings speak for themselves."

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.

 
 
 

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