Managing a High Profile Environmental Cleanup in Bankruptcy

Automotive & IndustrialFiduciary ServicesLitigation SupportTurnarounds & Restructuring

50M

Annual Sales

5M

in Debt

Freedom Industries, Charleston West Virginia

Challenge

Chemical processing for use in the coal industry. $50 million sales. $5 million debt. Freedom released the chemical MCHM from a ruptured storage tank into the Elk River resulting in public water supply contamination affecting over 300,000 residences in Charleston for 10 days.

  • The release of over 10,000 gallons of the chemical MCHM into the public water supply caused an environmental crisis for the company and the state of West Virginia.
  • The City of Charleston was unable to use the public water supply for 10 days and this created enormous public and political pressure.
  • The company could not sufficiently maintain ongoing operations and deal with a massive mobilization of government regulator agencies, political action groups, and emergency relief clean-up groups.
  • The company had two sister companies, both of which were at risk of continuing as a going concern.
  • The company’s management was under Federal investigation and customers were pulling their business.
  • The company was at full inventory capacity, in anticipation of the busy seasonal cold treatment, and the government officials were requiring liquidation of all material from the facility.
  • The Governor issued a Consent Order and a strict operating and environmental remediation process.

Solution

  • The company filed for Chapter 11 and appointed MorrisAnderson as CRO.
  • Immediately started working with customers to fulfill orders and sell inventory.
  • Created a remediation plan for the site and worked through various government approvals.
  • Sold the two unaffected companies as going concerns.
  • Processed over 6 million gallons of impacted water from the site, dismantled all holding tanks, removed impacted soil, liquidated remaining chemical supplies, and negotiated final solutions with all regulators.
  • Created a public relations plan to report progress and public transparency.

Results

  • Generated over $23 million in six months through sales and was able to self-fund the entire clean-up and remediation.
  • Completed the remediation while liquidating all assets.
  • Maintained bankruptcy court, public and regulatory support through the entire process which allowed for the environmental clean up less than in a year and a half.

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