West Virginia chemical company files for bankruptcy after leak

Bombarded by lawsuits and under federal investigation, the chemical company that spilled a dangerous solvent into a West Virginia river and fouled the drinking water of 300,000 people filed for federal bankruptcy protection Friday.

Freedom Industries Inc., owner of a storage tank that ruptured Jan. 9 and spilled 7,500 gallons of a coal-treatment foaming agent called MCHM into the Elk River, sought protection from creditors under a Chapter 11 filing by its parent company, Chemstream Holdings Inc. of Pennsylvania.

The filing will protect Freedom from creditors, temporarily halt lawsuits against it and allow the company to continue operating.

The spill prompted the governor to order residents of nine counties in the Charleston area not to use tap water for anything but flushing toilets. No baths, no washing dishes; even boiling the water could not make it safe.

In court documents, Freedom Industries says a water line break brought on by frigid temperatures may have caused "an object piercing upwards" to punch a hole in the 35,000-gallon storage tank, allowing the chemical to flow down an embankment into the river. The Freedom facility is just upstream from a major water treatment plant.

Freedom says in its filing that the water line scenario is "hypothesized" and intended for "explanatory purposes only." The hypothesis, it says, is not intended as a legally valid explanation in defense against any lawsuit.

Eight businesses and individuals filed a joint class action suit Monday in federal court in Charleston against Freedom, the local water company and the Tennessee chemical company that produced the MCHM, which is used to wash coal. The suit alleges that the companies either failed to take reasonable precautions to prevent the spill or concealed the true dangers of the chemical.

In addition, at least two dozen lawsuits against Freedom and other companies have been filed in state court in West Virginia. The U.S. attorney in Charleston has launched an investigation.

Kevin Thompson, a Charleston lawyer who filed the federal class action suit, said in an interview Friday that Freedom seemed to be claiming that a shard of ice from the water pipe rupture pierced the storage tank.

"That sounds pretty preposterous," Thompson said. "It's not much of a steel tank if a chunk of ice can pierce it."

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West Virginia chemical company files for bankruptcy after leak