Facing water spill suits, Freedom Industries files for bankruptcy

CHARLESTON -- The company behind the chemical spill that has left more than 300,000 West Virginians without water for days has filed for bankruptcy.

Freedom Industries Inc.  filed for Chapter 11 bankruptcy protection Friday in U.S. District Court in Charleston. The petition, which was signed by the Freedom president Gary Southern, estimates the company's debt at $10 million or less.

As of Thursday, more than 30 lawsuits had been filed against Freedom Industries in various state and federal courts related to the leak that was discovered Jan. 9 of thousands of gallons of crude MCHM into the Elk River just upstream from the West Virginia American Water intake facility. For most of the time since then, Charleston and surrounding areas have been told not to use the water for anything other than flushing toilets.

The lawsuits have been filed by businesses and individuals and make claims of lost business, health concerns, medical monitoring and more. Some of the filings are potential class actions, and some seek punitive damages.

According to the bankruptcy documents, Chemstream Holdings Inc. is the owner of Freedom Industries, which is represented by Mark Freedlander of McGuireWoods in Pittsburgh.

In the filings, Freedom says a water line break near its facility could have been responsible for the chemical leak.

"It is presently hypothesized that a local water line break adjacent to the Charleston facility may have or contributed to the ground beneath a storage tank at the Charleston facility to freeze in the extraordinary frigid temperatures in the days immediately preceding the incident," the filing states. "The debtor and investigative authorities have taken note of the hole in the affected storage tank that appears to have come from an object piercing upwards through the base of the affected storage tank.

"Investigations by multiple agencies are ongoing with full cooperation by the debtor."

The papers also say Freedom owes more than $3.5 million to debtors. At the top of that list are FloMin Coal Inc. of Altanta ($648,221) and Silverlake Holding of Evansville, Ind., ($615,954). The documents also show that Freedom Industries owes more than $2.4 million in unpaid taxes to the Internal Revenue Service dating back to 2000.