CHARLESTON – The bankruptcy case involving Freedom Industries has been officially settled, after U.S. Bankruptcy Judge Ronald Pearson gave final approval to Freedom's plan.
The plan, approved Oct. 6, puts an end to negotiations between the company's lawyers, creditors, local residents who filed lawsuits, environmental regulators and other parties.
In the final agreement, Freedom's remaining assets and insurance money will be used to finish cleaning up the site on the Elk River where the spill occurred in January 2014.
Any money left over from cleaning up the spill site, which is projected to be approximately $2.1 million, will be used to pay people and business who claimed losses from the chemical spill and water contamination.
Those whose claims are less than $3,000 will collect a little less than half of what they lost and claims of more than $3,000 will collect much less than they claimed, as the large claims total more than $56 million and there is only approximately $1.6 million to pay those claims.
Freedom's former owners and directors have agreed to contribute money to the bankruptcy estate in exchange for a release of liability and approximately $2.8 million comes from the former owners and directors.
Freedom Industries' former president, Gary Southern, contributed $300,000, while Chemstream and those who sold Freedom to Chemstream contributed to the estate as well.
The plan complies with bankruptcy code and the plan shall be binding upon and inure to the benefit of the debtor, the holders of all claims and equity interest and their respective successors and assigns, including the plan administrator, according to the Oct. 6 document.
On Jan. 9, 2014, government officials discovered a licorice smell originating from Freedom's facility.
Freedom did not self-report the leak of MCHM, although it had an obligation to do so immediately, according to the suits.
The plaintiffs in the many lawsuits against Freedom claim airborne release of MCHM from the facility caused chemical air pollution, resulting in ambient concentrations well above the odor threshold for the chemical over an area of several square miles and over a period of several days after the Jan. 9 release.
Eastman is the exclusive U.S. manufacturer of MCHM and Eastman had a duty to make full disclosure on Material Safety Data Sheets for MCHM under the Emergency Planning Community Right to Know Act and to reflect accurately the state of knowledge of the medical and scientific communities about the toxicity of MCHM.
The chemical spill tainted more than 300,000 WVAWC customers' water in parts of nine counties across the state.
The Center for Disease Control advised pregnant women to not drink tap water until the chemical was completely gone from the water.
U.S. Bankruptcy Court for the Southern District of West Virginia case number: 2:14-bk-20017
