Freedom Industries finance overseer named
CHARLESTON, W.Va. -- The hiring of a chief restructuring officer means a "significant change in management" for Freedom Industries, a federal bankruptcy judge said Tuesday.
The company responsible for a chemical leak that fouled the drinking water for 300,000 West Virginians for days got approval to hire Mark Welch to head its finances while it winds down operations. Welch is a "turnaround consultant" with MorrisAnderson in Chicago, he said at a hearing in U.S. Bankruptcy Court in Charleston on Tuesday.
Freedom filed for Chapter 11 bankruptcy on Jan. 17, eight days after Crude MCHM seeped out of a tank and into the Elk River at the company's Barlow Drive location. Welch said Tuesday he's been involved with Freedom since that day.
Chapter 11 allows a company to reorganize, but Freedom plans to close. Operations will end by the end of this week, Welch said during Tuesday's hearing.
Welch believes Freedom will have between $2 million and $3 million left in June to pay creditors. A bankruptcy trustee appointed by the U.S. Department of Justice to Freedom's case said the Office of the U.S. Trustee doesn't usually like a company to hire chief restructuring officers. But David Bissett, the trustee handling Freedom's case, told U.S. Bankruptcy Judge Ronald Pearson that he was OK with Welch's hiring "based on the strong support from the unsecured creditors committee."
Bissett's office appointed an official committee of unsecured creditors in the case last month. Unsecured creditors are those who are close to the bottom of the list to get paid and don't have, for example, the power to file a lien to ensure they get paid.
Pearson agreed before he approved Welch's hiring. The people who have money at risk "believe it's the best course of action to bring objectivity," the judge said.
Since the spill, dozens of lawsuits have been filed against Freedom and West Virginia American Water Co. Welch said he would focus on costs associated with the environmental cleanup, collecting money Freedom is owed and winding down the business. Environmental remediation is the biggest cost Freedom faces "by far," Welch said.
Welch will get paid $17,000 every week for the first six weeks and after that $12,750 a week or $425 an hour -- whichever is less, he said.
Also at Tuesday's hearing, an attorney representing the unsecured creditors committee said they plan to object to a motion filed Saturday by Freedom President Gary Southern asking to get paid while the company is in bankruptcy. Southern makes $230,000 a year.Reach Kate White at email@example.com or 304-348-1723.