Freedom Industries Files For Bankruptcy, Fails to Inform Authorities of Second Chemical Spill

dock-on-river-1434920-m.jpgThe woes for 300,000 West Virginians across nine counties continue, as Freedom Industries recently admitted to spilling a second chemical into the Elk River, not just the 7,500 to 10,000 gallons of crude methylcyclohexanemethanol (MCHM) initially reported.

The spill took place on January 9, leaving thousands of West Virginians without water for drinking or bathing for over a week. Already at least eight class action lawsuits have been filed as a result of the spill’s affects. As a result, Freedom Industries has filed for Chapter 11 business bankruptcy, which created an injunction known as the automatic stay that prevents lawsuits from moving forward while the business reorganizes its affairs. Yet while Freedom Industries and state officials have declared that the MCHM concentration is now low enough that using the water is safe again, Freedom Industry officials admitted to not telling anyone about the second chemical spilled: a mixture of polyglycol ethers known as PPH.

Freedom Industries admitted to the second chemical’s existence during an investigation into the causes of the spill. The company did not inform government officials initially because the chemical is “proprietary,” meaning that the mixture is considered a trade secret. The extent to which the chemical compound is harmful is still yet to be determined. A Freedom Industries data sheet claims that it can irritate the skin and eyes and may be harmful if ingested. The only bright side was that PPH was considered to be “less lethal” than MCHM. Freedom Industry spokespeople claim that the PPH has been removed from the water, but its long-term effects to those exposed remain unknown.

If Freedom Industries were an individual rather than a corporation, it could eventually be subject to a nondischargeability lawsuit. A nondischargeability lawsuit is filed by a creditor or creditors to prevent the debtor from discharging the debt, so that when the bankruptcy process is completed, the debtor is stuck with the original debt owed. Reasons for nondischargeability include fraud, willful and malicious injury, concealment, making a false oath, and refusal to obey a court order. However, some bankruptcy courts have found that a corporation that commits one of the above is not subject to nondischargeability and can therefore deal with any debts in bankruptcy.

If that is the case, those affected by the spill may have other options. Under limited circumstances, they might seek relief from automatic stay, which would life the automatic stay and permit them to continue with their lawsuits. The bankruptcy might also be converted to a Chapter 7 bankruptcy if the company cannot fulfill the terms of Chapter 11. If so, the company may not be able to fulfill the terms of a Chapter 7 bankruptcy either, which means that the case could be dismissed and all pending lawsuits would be allowed to proceed. Contact a West Virginia bankruptcy attorney to find out more.

The Wolfe Law Firm has been providing legal services for nearly 25 years. Located in Elkins, West Virginia, the firm provides services in the areas of personal injury, criminal defense, bankruptcy, and mediation. If you are looking for an experienced West Virginia attorney, contact us today.

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