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Judge has questions about Freedom’s sale of Nitro plant

By Kate White, Staff writer
LAWRENCE Pierce| Gazette On Tuesday, a bankruptcy judge will hear Freedom’s request to sell its Nitro facility to Lexycon LLC.

The potential speedy sale of Poca Blending to a new company formed by former executives of Freedom Industries could be “problematic.”

U.S. Bankruptcy Judge Ronald Pearson has questions about “the possible advantage to insider interests.” On Tuesday, he will hear Freedom’s request to sell its Nitro facility to Lexycon LLC — and only Lexycon LLC.

Freedom is the company responsible for the Jan. 9 chemical leak that contaminated the drinking water for 300,000 West Virginians. The company filed for bankruptcy about a week after the leak.

Lexycon is a chemical company that registered with the West Virginia Secretary of State’s Office about a month ago. Freedom and Lexycon share addresses and phone numbers. Lexycon was founded by a former Freedom executive and has ties to at least two other current or former Freedom executives.

Pearson wrote Wednesday that some of the strict requirements of the proposed sale could “be potentially problematic in that it may not respect the rights of claimants and general creditors.”

The sale wouldn’t be subject to a general public auction or open to higher or better offers, the motion filed Monday by Freedom’s attorneys states. Also, the transaction must be closed by May 20, so Lexycon can “order supplies and chemicals necessary to meet expected demands of potential customers of dust control product.”

Pearson wants to know if those who might be entitled to claims for damages have been advised of rights they might have to benefit from the transaction.

Usually, Pearson’s order states, bankruptcy rules require at least 21 days notice before estate assets are sold.

“Although there are certainly exceptions where circumstances have dictated the necessity for shortened notice, there is a heavy burden on those who seek such expedited consideration,” the judge wrote.

Poca Blending, a longtime affiliate of Freedom Industries, merged with Freedom in December, about a week before the leak of the coal-cleaning chemical Crude MCHM.

If it’s not sold, Poca Blending would be demolished, the motion states, which would cost the bankruptcy estate about $400,000. Attorneys argue that the Freedom name is “tainted” beyond repair because of the chemical leak.

The deal isn’t “the product of fraud or collusion between the buyer and other interested parties or the [chief restructuring officer],” the motion by Freedom’s attorneys states.

The president of Lexycon is Kevin Skiles. Skiles is the former vice president of research and technology of Freedom.

Skiles released a statement on the company’s website after receiving questions from the Gazette earlier this month. “Lexycon, LLC was formed in Florida and is privately held that has no ties in any way with Gary Southern, the former president of Freedom Industries,” he wrote. “Nor is Denny Farrell an owner or employee of Lexycon, LLC. He is an independent consultant who has been engaged by the company to help with the transition of the companies business as it relates to the coal industry.”

Reach Kate White at kate.white@wvgazette.com or 304-348-1723.


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