Managing a High Profile Environmental Cleanup in Bankruptcy

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 at risk of continuing as a going concern
  • The company’s management was under Federal investigation and customers where pulling their business
  • The company was at full inventory capacity, in anticipation of the busy seasonal cold treatment, and the government officials where 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 relation 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

Mark J. Welch

Mark J. Welch, CPA, CTP is a Principal at MorrisAnderson based in Pittsburgh. He has over 20 years in bankruptcy and restructuring experience especially in leadership roles and fiduciary positions with clients. Prior to joining MorrisAnderson, Mark was the Director of Internal Audit at Southern Air Transport, Inc., a mid-sized cargo air-transport airline. He also… Read More