Freedom Industries Seeks to Settle West Virginia Spill Case for $2.7M

By | May 4, 2015

Freedom Industries wants to wrap up its bankruptcy case by paying a variety of groups $6.7 million, including $2.7 million for victims of the company’s January 2014 chemical spill that sullied the water supply across nine counties.

The company offered its liquidation proposal in a Charleston federal bankruptcy court filing last week. Freedom also urged quick action to hold a vote of claimants and a hearing on the plan by mid-June.

Freedom’s January 2014 spill spurred a ban on tap water for 300,000 people for days. Businesses that couldn’t operate without water, including restaurants, and individuals are among those seeking payouts from Freedom.

Of the $2.7 million for spill victims, $500,000 would be earmarked for people with claims of $3,000 or less.

Freedom intends to pay $2.2 million to professionals hired for the bankruptcy case. However, U.S. Bankruptcy Judge Ronald Pearson previously has been skeptical of the fees sought by lawyers, consultants and other professionals in the case.

Other creditors would get $500,000, an additional $500,000 would pay taxes to the IRS, and $150,000 would go to state regulators as they work to finish cleanup at the Charleston site of the spill.

The bulk of the money would come from a $3.2 million insurance settlement and a $3.1 million contribution by former Freedom officials.

Of the $3.1 million, former Freedom President Gary Southern would kick in $300,000.

About $2.8 million would come from an account with Freedom’s parent company that was set up when it bought Freedom just before last year’s spill.

Southern and former Freedom official Dennis Farrell have pleaded not guilty to federal pollution charges in the spill. Southern also pleaded not guilty to bankruptcy fraud charges, which say he tried to shield his personal wealth from lawsuits in the spill’s aftermath.

Four other former Freedom officials and the company itself have pleaded guilty to pollution charges.

The Charleston Gazette first reported the bankruptcy proposal.

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