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Company tied to West Virginia chemical spill seeks bankruptcy

Source: Reuters - Fri, 17 Jan 2014 21:13 GMT
Author: Reuters
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(Adds details from court records in paragraphs 2-5)

By Tom Hals

Jan 17 (Reuters) - Specialty chemicals maker Freedom Industries Inc filed for Chapter 11 bankruptcy on Friday, eight days after a leak from one of the company's storage tanks contaminated drinking water for hundreds of thousands of West Virginia residents.

A chemical used to process coal spilled into the Elk River in Charleston last week, prompting the state's governor to declare a state of emergency and ban the use of drinking water. More than 200 people have visited emergency rooms with nausea.

As a result of the leak, vendors have demanded Freedom pay in cash, draining the company of financing and prompting it to seek bankruptcy, according to documents filed in the U.S. Bankruptcy Court in Charleston, West Virginia.

"Likewise, the defense of the numerous suits filed against the debtor will exhaust the debtor's liquidity," Freedom said in a court filing. The bankruptcy filing will put a stay on more than 20 lawsuits filed against the company over the spill.

The company filed an emergency motion seeking court authority to borrow an initial $4 million from WV Funding LLC.

The company estimated it had up to $10 million in both assets and liabilities, according to the filings.

The case is In re Freedom Industries Inc, U.S. Bankruptcy Court, Southern District of West Virginia, No. 14-20017 (Reporting by Tom Hals in Wilmington, Delaware; Editing by David Gregorio and Jonathan Oatis)

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