Company behind West Virginia's chemical spill files for bankruptcy

Freedom Industries faces class-action lawsuits and a Justice Department investigation

Published January 17, 2014 9:08PM (EST)

Freedom Industries, the company responsible for the chemical spill that left 300,000 West Virginians without tap water for the better part of a week, filled for Chapter 11 bankruptcy Friday.

"I think they underestimated the liabilities just a tad," attorney Aaron Harrah, who firm filed a purported class action lawsuit against Freedom and West Virginia American Water Co., told the Wall Street Journal. According to the Charleston Gazette, the company's assets and liabilities are each listed as between $1 million and $10 million. Freedom owes $3.66 million to its top 20 unsecured creditors, over $2.4 million in unpaid taxes dating back to at least 2000 and nearly $93,000 in Kanawha County property taxes, about half of which were past due and had become delinquent.

The announcement comes at the end of what turned out to be a rough two weeks for Pennsylvania coal mining executive Cliff Forrest, who purchased Freedom Industries for $20 million a week before the 7,500 gallon leak was discovered. The company's troubles, though, are far from over. Harrah said his suit, one of 25-some lawsuits that have been filed against Freedom, is still on:

Bankruptcy offers Freedom a break from having to answer the suits, some of which demand punitive damages. It also opens the door to court-supervised probes into what led to the disaster, and what resources are available to pay any damages.

Mr. Harrah said lawyers pursuing Freedom over the spill are at the start of their investigation into what happened and who should be held accountable. However, the damages are still accumulating in the form of lost business and potential health consequences from the chemical, he said.

"The damages are continuing in nature and continuing to grow," Mr. Harrah said.

By Lindsay Abrams

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Bankruptcy Freedom Industries Irs West Virginia Chemical Spill