Friday, January 17, 2014
The Chemical Plot Thickens in West Virginia
Freedom Industries Inc (“FF Inc”) at 1:25 pm Eastern time today filed an emergency petition under Chapter 11 of the U.S. Bankruptcy Code. It is an incomplete filing and not much can be determined from the documents at this point. FF Inc now known as the Debtor and probably soon to be known as the Debtor in Possession must file the balance of the documents no later than January 31st unless the Debtor for good cause shown on motion receives an extension of that requirement from the bankruptcy judge assigned to the case. Failure to file the missing documents is grounds for dismissal and the clerk is authorized to dismiss the case if there is no filing by the due date. For some reason the filing information and the docket sheet do not disclose the name of the bankruptcy judge assigned to the case. The case number is 2:14-bk-20017.
The name of the Debtor is Freedom Industries, Inc. It is a West Virginia corporation. The debtor has filed an entire slew of 'first day motions' such as for leave to pay employees and to pay benefits and such other things this is always done on the day the case is filed. I have not reviewed those motions yet at any great length. There will be plenty of time to do this since this is only the first day of what will probably be a very long process. One interesting motion filed today as one of those First Day Motions is one authorizing the Debtor to use existing “cash management, bank accounts and forms” as it continues its operations. This is somewhat unusual since the law normally requires the Debtor to close all his bank accounts open at the time of the filing and to open new accounts in an approved bank showing the case number of the bankruptcy filing and that the Debtor company is the Debtor in Possession. I am mildly interested in the “whys” of this motion.
The president of FF Inc is one Gary Southern who apparently is one of the founders of the company. Recently it was taken over by another company called Chemstream Holdings LLC which is listed on the corporate ownership declaration filed in this case as the owner of one hundred percent of FF Inc's stock. A company with a similarly named entity Chemstream Inc. is listed on FF's list of its “20 Largest Creditors” which was filed today in the case. There is no information other than the address of the creditor in Storystown PA and the amount of the claim against the debtor which is shown as $175.566.75 set out on this document This is not inappropriate since the form and rule under which it is filed does not require any further detail. More will be known about this after Creditor Schedules are filed in this case in two weeks.
Expect more over this weekend as the documents are reviewed by me and other curious people and, since this filing is in response to a newsworthy event, the poisoning of 300,000 West Virginians by FF's leaky 35000 gallon storage tank containing MEBS, when news media start talking in earnest about this case.