Freedom Industries, the company that recently leaked thousands of gallons of toxic chemicals into the Elk River in West Virginia, quietly filed for bankruptcy this past Friday to shield themselves from the onslaught of lawsuits filed against the company.
The current owner of Freedom Industries, J. Clifford Forrest, took control of the company about a week before the chemical spill occurred, and only a week later filed for bankruptcy. According to the filing, the company owes more than $3.6 million to creditors (a fact that was known when Forrest bought the company in late December).
What Forrest couldn’t have known at the time was that he was sitting on a time bomb, and that his newly purchased company had been skirting safety regulations and vital equipment upgrades in an effort to save a few bucks in the short term.
The company is now facing an investigation by the U.S. Department of Justice, in addition to at least 20 separate lawsuits from residents. The number of lawsuits is expected to rise, as the chemicals spill is estimated to have poisoned at least one-sixth of West Virginia’s entire water supply.
But Forrest isn’t the victim in this case. His decision to file for bankruptcy protection had nothing to do with the prior debts that the company owed, and everything to do with preventing the millions of dollars his firm will be forced to pay out in lawsuit settlements. The bankruptcy filing will effectively temporarily “stay” the lawsuits, which prevents any payments from being made.
Forrest knew this, and this is why he had his company file bankruptcy. But this doesn’t mean that the company is no longer in business. To the contrary, Raw Story has revealed that Forrest is also the owner of a brand new firm called Mountaineer Funding LLC, which is funding the company to the tune of $5 million (more than enough to handle their current, non-lawsuit liabilities). So the liabilities of Freedom Industries can be handled by Forrest’s funding firm, as can the daily operations, but the lawsuits are now being held in limbo since Freedom Industries is technically “bankrupt.”