The exact identity of Freedom's DIP lender is a little opaque.
The listed lender is WV Funding LLC, a company that was not listed with the West Virginia secretary of state on Friday. Updated listings now show that it was incorporated on Friday, the day Freedom filed for bankruptcy.
WV Funding's one listed member is a company called Mountaineer Funding, LLC.
Mountaineer Funding was also founded on Friday, according to secretary of state filings. There is also a space for Mountaineer Funding to sign on the DIP agreement.
Mountaineer Funding's one listed member is J. Clifford Forrest.
J. Clifford Forrest also appears to be the owner of Freedom Industries. A source close to Freedom, who refused to be identified because of pending litigation, confirmed that Forrest owns Chemstream Holdings, Freedom's parent company, although that could not be confirmed by any official documents.
Chemstream Holdings also shares a Pennsylvania address with Rosebud Mining Company, which lists Forrest as its president.
Chemstream is listed as Freedom's owner in the bankruptcy filing, although Forrest's name does not appear.
Simons said that it's unusual but not unheard of for a DIP lender to be very closely related to the company receiving the money.
"My reaction is that it's not necessarily improper," Simons said. "I would suggest that it would be subject to more scrutiny, but as long as it's disclosed and it's subject to the appropriate scrutiny and the parties have the opportunity to object, then it will probably stand up."
Forrest, who has not responded to repeated requests for comment, appears to have significant assets aside from Chemstream and Freedom.
Rosebud Mining owns 28 coal mines and eight coal preparation plants, according to its website. As of September, it employed nearly 1,300 people, according to its website. It is the third largest coal producer in Pennsylvania, the fourth largest in Ohio and the 21st largest in the nation.
Forrest also owns The Lodge at Glendorn, a 1,280-acre luxury resort in northern Pennsylvania. The resort has one main lodge and 12 cabins, with rooms and cabins that book for between $450 and $1,395 per night.
Simons said that Freedom's creditors and potential creditors, including lawyers who have already filed more than two dozen lawsuits against the company, will closely examine Freedom's corporate structure, looking to get paid.
Separate companies, even with the same ownership, are generally not liable for one another's debts in bankruptcy filings.
Simons said that creditors would try to do what's called "piercing the corporate veil;" and prove that affiliated companies are operating for the same purpose. That ruling would be up to a bankruptcy judge.
"Superficially, right now, it would seem like only Freedom's going to be liable," Simons said. "But if you find that another company is virtually the altar ego of one company, then they're as liable as the one company."
Expedited hearings are scheduled for Tuesday afternoon to consider several of Freedom's bankruptcy-related filings.
Reach David Gutman at david.gut...@wvgazette.com or 304-348-5119.