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Federal Bankruptcy Judge Approves Emergency Loan For Freedom Industries

Reported: Jan. 21, 2014 5:40 PM EST
Updated: Jan. 22, 2014 9:25 AM EST
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CHARLESTON, W.Va. (Bob Aaron, Jeff Morris) -- A federal bankruptcy judge on Tuesday approved an emergency loan that will keep Freedom Industries, the company responsible for a chemical leak that led to a water crisis, afloat for now.

During a six-hour hearing in federal bankruptcy court, Judge Ronald Pearson approved a $4 million loan to Freedom from a company insider. The judge also agreed to a plan to let Freedom pay its 61 employees Wednesday and to pay key suppliers $3 million if they agree to allow Freedom to make future purchases by credit.

Pearson said he is interested in a deal that will keep employees paid and that covers the environmental cleanup at the company's site on Barlow Drive.

On the stand, company President Gary Southern said that Freedom is turning into a "death spiral" and will not turn the corner unless the current perceptions of customers and suppliers changes.




CHARLESTON, W.Va. (Bob Aaron, Jeff Morris) -- Freedom Industries' president said at a federal bankruptcy court hearing in Charleston on Tuesday the company is "turning into a death spiral unless it can change the perception of its customers and suppliers."

Gary Southern made the comments during the hearing in court where the company is seeking Chapter 11 bankruptcy protection after the leak of 4-Methylcyclohexane Methanol (MCHM) at its Barlow Drive facility in Charleston. Multiple lawsuits have been filed against Freedom over the leak, which led to a water crisis in nine counties.

Southern maintained the company can turn the corner if it can change the current perception following the leak. Freedom indicated it has a $3 million liability insurance policy to cover pollution and a general liability insurance policy of about $2 million.

Bankruptcy Judge Ronald Pearson said it is the most unusual case he has ever dealt with as a judge. He said he is trying to develop a plan so the company's employees can get paid Wednesday while the cleanup continues at the Barlow Drive facility. The company has spent $800,000 on the cleanup so far.

Freedom has continued to do business at the terminal after the leak because it couldn't find enough tank space to remove all liquid material from the site, so the company has been trying to sell the material.

The company is owned by Chemstream Holdings, a Pennsylvania company solely owned by Cliff Forrest.



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