Company responsible for West Virginia water crisis files for bankruptcy

Freedom Industries, the company blamed for a chemical spill that left 300,000 West Virginians without safe drinking water over last week, filed for bankruptcy on Friday.

Freedom Industries is facing multiple lawsuits and state and federal investigations after the Jan. 9 spill. It filed a bankruptcy petition with the U.S. Bankruptcy Court in the Southern District of West Virginia.

Company president Gary Southern signed the paperwork, which lists the company's assets and liabilities as a range between $1 million and $10 million. It says the company has at least 200 creditors and owes its top 20 creditors $3.66 million.

As a result of the leak, vendors have demanded Freedom pay in cash, draining the company of financing and prompting it to seek bankruptcy, according to documents filed in the U.S. Bankruptcy Court in Charleston, West Virginia.

"Likewise, the defense of the numerous suits filed against  the debtor will exhaust the debtor's liquidity," Freedom said in a court filing. The bankruptcy filing will put a stay on more than 20 lawsuits filed against the company over the spill.

The company filed an emergency motion seeking court authority to borrow an initial $4 million from WV Funding LLC.

Water in the Elk River was tainted after a chemical used to process coal leaked from a storage tank and then a containment area at a facility owned by Freedom Industries. The facility is mere miles up river from West Virginia’s largest water utility.

The bankruptcy document says the leaky storage tank appears to have been pierced through its base by some sort of object. It also says a current theory for the hole is that a local water line that broke near the Charleston plant could have made the ground beneath the storage tank freeze in the cold days before the spill.

After the spill, residents in a nine-county area around the state capital of Charleston were told not to use the water for anything other than flushing toilets. Some businesses and schools were forced to close for several days. The water restrictions have since been lifted for most residents, but many believe the water is still contaminated.

The terminal that leaked had not been inspected by state officials since 2001, when it was owned by a different company operating under more stringent rules. State officials said Freedom Industries bought the terminal last month.

Al Jazeera and wire services