(Adds details from filing; water restored to almost all
By Tom Hals
Jan 17 Specialty chemicals maker Freedom
Industries Inc filed for Chapter 11 bankruptcy protection on
Friday, eight days after a leak from one of its storage tanks
contaminated drinking water for hundreds of thousands of West
A chemical used to process coal spilled into the Elk River
in Charleston, prompting the state's governor to declare a state
of emergency in nine counties and ban the use of drinking water
for more than 300,000 people in the region.
More than 200 people have visited hospital emergency rooms,
complaining of nausea.
As a result of the Jan. 9 leak, vendors have demanded that
Freedom pay in cash, draining the company of finances and
prompting it to seek bankruptcy protection, according to
documents filed in the U.S. Bankruptcy Court in Charleston, West
"Likewise, the defense of the numerous suits filed against
the debtor will exhaust the debtor's liquidity," Freedom said in
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 move for Chapter 11 protection came the same day a
do-not-use water advisory was lifted for nearly all affected
areas, clearing residents to shower and drink from the tap for
the first time in more than a week.
Officials at West Virginia American Water, the state's
largest water utility, told customers that "out of an abundance
of caution, you may wish to consider an alternative drinking
water source for pregnant women."
In the Chapter 11 filing, Freedom Industries acknowledges
that a chemical known as 4-methylcyclohexane methanol, or crude
MCHM, apparently leaked from one of its storage tanks upstream
on the Elk River, compromising the water supply and closing a
number of businesses.
"The debtor understands the water service is in the process
of being restored," the filing reads.
The Chapter 11 filing will help protect the company's
assets, shielding it from further lawsuits while allowing it to
remain in business.
Lawyers started filing lawsuits against the company less
than 24 hours after the first alarms were sounded about the
release of an industrial chemical into the Elk River.
One of the lawsuits was brought by a dialysis patient whose
kidney transplant was delayed because of a lack of clean water.
Another was filed by the owner of a local Mexican cafe who told
employees not to come to work, causing them to lose days of pay,
according to attorney Roger Decanio.
Freedom Industries was founded in 1986 and describes itself
as a leading producer of chemicals for the mining, steel and
(Reporting by Tom Hals in Wilmington, Delaware and Victoria
Cavaliere in New York; Editing by David Gregorio, Jonathan Oatis
and Gunna Dickson)