The Associated Press
The company that spilled chemicals into 300,000 West Virginians’ water supply could have about $3 million left this summer before it tries to pay back hundreds of creditors.
Freedom Industries Chief Restructuring Officer Mark Welch estimated in bankruptcy court Tuesday that the company could be down to $2.5 million to $3 million in mid-June. He said the 51-employee company will cease business operations by the week’s end.
Anthony Majestro, one of the lawyers representing West Virginia businesses suing Freedom Industries, said that wouldn’t leave much help for citizens hurt by the Jan. 9 spill.
Dozens of businesses and residents have sued Freedom over lost wages and profits during a water-use ban. Their cases remain frozen while bankruptcy proceedings continue, and they are waiting in line with other creditors looking for compensation from Freedom Industries.
“It’s not a surprising number,” Majestro said of the $3 million estimate. “As the judge has said, it’s nowhere near enough to satisfy claims of all the people who have been harmed in the spill.”
Judge Ronald G. Pearson allowed Freedom to hire Welch on Tuesday, despite concerns about Welch’s pay rate. The new officer would receive over $72,000 a month for six weeks and $54,000 monthly afterward, and could hire another expert at $375 per hour, court documents state.
Welch started consulting for Freedom Industries on Jan. 17, the day the company filed for bankruptcy. The turnaround specialist from Chicago-based MorrisAnderson & Associates estimated he could net Freedom $1 million by collecting payments due and finding savings during environmental cleanup.
Freedom’s deadline was Saturday to start demolishing the Charleston facility responsible for the Jan. 9 spill, which contaminated nine counties’ drinking water for four to 10 days.
Lawyers for a committee of Freedom’s unsecured creditors supported the hire. The change will shift many management duties away from company president Gary Southern, who has been publicly visible only at a handful of bankruptcy hearings and at a brief news conference the day after the spill.
Southern, who did not attend Tuesday’s hearing, has asked the court if he could be paid for his work after the company’s bankruptcy declaration. His last check covered work up to Jan. 19, court documents show. The request would only include pay from mid-January until Welch’s sign-on as chief restructuring officer. Southern is paid a $230,000 salary.
Southern is also seeking the court’s approval to let Freedom and its insurance policy cover his personal legal fees. Court documents show Southern has accumulated almost $49,000 in legal costs for representation in two lawsuits and in state and federal investigations about the spill.
The court documents cite company bylaws, which shield top executives from liabilities and legal costs related to their jobs.
Attorney Ronald Gold, representing the creditors committee, said the group will object to Southern’s requests. Attorney Mark Freedlander, who represents Freedom Industries, said he doesn’t know if the company will likewise oppose them.