The Canadian Press - ONLINE EDITION

Company behind West Virginia chemical spill reaches deal in court for up to $4M in credit

  • Print

CHARLESTON, W.Va. - The embattled company behind West Virginia's chemical spill reached a bankruptcy court deal Tuesday for up to $4 million in credit from a lender to help continue operations, a company attorney said.

In bankruptcy court testimony, Freedom Industries President Gary Southern called the 12 days since the company's Jan. 9 chemical spill "completely chaotic."

Mark Freelander, an attorney for Freedom, later released key details of the credit deal approved Tuesday. He said the arrangement would allow Freedom Industries to continue paying its employees and top vendors and also provide funds to cover for environmental cleanup from the spill in the Elk River.

The spill contaminated water supplies for some 300,000 people in West Virginia.

Southern had said the company spent $800,000 last week to remedy environmental damage from the spill.

Southern, who admitted he hasn't had a lot of sleep and apologized for sounding blunt, said money isn't the solution to lift the stigma on his company for its suppliers and customers. He said the spill was causing "perception problems" for the firm.

Freedom Industries filed for Chapter 11 bankruptcy Friday, freezing dozens of lawsuits against his company. Many are by local businesses that remained closed for days during a water-use ban. State and federal investigations into the spill of a coal-cleaning chemical are continuing.

The deal Freedom Industries reached Tuesday lets the company continue paying its 51 employees in the short term, a biweekly payroll of about $172,000, according to Freelander. The company can also continue paying costs for environmental remediation and will have money for critical day-to-day administrative expenses, and can pay top vendors, according to the attorney.

West Virginia American Water Company, the supplier for the nine-county region, objected to Freedom Industries' first proposal for emergency financing of up to $5 million in credit. Freedom Industries is using a lender created Friday that essentially is run by the company's top executive, J. Clifford Forrest of Pittsburgh.

West Virginia American Water argued through its attorneys that Freedom Industries' financer could foreclose on the company's valuable assets and abandon the rest, leaving behind "only the toxic facilities and huge damage claims caused by the Freedom spill."

Chief Judge Ronald G. Pearson, who called the case one of the most unusual he's seen, said Freedom Industries wouldn't obtain all the protections it sought, since the company so far has offered very little financial information.

After about five and a half hours in court, lawyers for the water company and Freedom Industries agreed to strike out the possibility of controversial liens. Freedom Industries can access $3 million in credit initially, with the chance for another $1 million, according to Freelander.

The rest of the hearing offered a closer look at the company.

Freedom Chief Finance Officer Terry Cline said the company owes hundreds of thousands of dollars in back taxes to the Internal Revenue Service. Most of its business isn't in coal-cleaning chemicals like the one that spilled; it's in a variety of anti-freeze agents, the court also heard.

The company has about a $1 million to $2 million insurance general policy, and a $3 million policy specifically for pollution incidents, Southern said.

Charleston attorney Anthony Majestro, representing several businesses that sued Freedom Industries, said it is still possible to try to collect on the insurance policy during bankruptcy proceedings. He hasn't indicated whether his clients will attempt that.

Freedom Industries had $1 million in an escrow account to make "certain upgrades in facilitation of the business" when it merged with several other companies Dec. 31, Southern said.

Department of Environmental Protection officials have said that money was set aside to fix the cracked containment wall that ultimately let chemicals seep into the Elk River. But Southern would not specifically say the money was for fixing that wall.

Fact Check

Fact Check

Have you found an error, or know of something we’ve missed in one of our stories?
Please use the form below and let us know.

* Required
  • Please post the headline of the story or the title of the video with the error.

  • Please post exactly what was wrong with the story.

  • Please indicate your source for the correct information.

  • Yes


  • This will only be used to contact you if we have a question about your submission, it will not be used to identify you or be published.

  • Cancel

Having problems with the form?

Contact Us Directly
  • Print

You can comment on most stories on You can also agree or disagree with other comments. All you need to do is be a Winnipeg Free Press print or e-edition subscriber to join the conversation and give your feedback.

You can comment on most stories on You can also agree or disagree with other comments. All you need to do is be a Winnipeg Free Press print or e-edition subscriber to join the conversation and give your feedback.

Have Your Say

New to commenting? Check out our Frequently Asked Questions.

Have Your Say

Comments are open to Winnipeg Free Press print or e-edition subscribers only. why?

Have Your Say

Comments are open to Winnipeg Free Press Subscribers only. why?

The Winnipeg Free Press does not necessarily endorse any of the views posted. By submitting your comment, you agree to our Terms and Conditions. These terms were revised effective April 16, 2010.


Make text: Larger | Smaller


Chief justices breakdown cameras in courtroom project

View more like this

Photo Store Gallery

  • PHIL.HOSSACK@FREEPRESS.MB.CA Winnipeg Free Press 090528 STAND UP...(Weather) One to oversee the pecking order, a pack of pelican's fishes the eddies under the Red River control structure at Lockport Thursday morning......
  • Carolyn Kavanagh(10) had this large dragonfly land on her while spending time at Winnetka Lake, Ontario. photo by Andrea Kavanagh (mom0 show us your summer winnipeg free press

View More Gallery Photos


Now that the snow is mostly gone, what are your plans?

View Results

Ads by Google