Judge OKs Freedom Industries’ sale of Poca Blending; legal costs pile up for bankrupt chemical company
Freedom Industries can sell Poca Blending, its branch in Nitro, to a company run by Freedom’s former executives, a judge decided Friday.
The sale had been pending since Tuesday, when a U.S. Bankruptcy Court judge approved it, but the judge insisted that Freedom continue to accept possible bids until noon Friday.
When no bids came in, Judge Ronald Pearson approved the sale, for about $575,000, to Lexycon LLC, a newly formed company owned by David Carson, an Indiana-based businessman with a long history in the chemical industry. Lexycon will be run by Kevin Skiles, a former Freedom vice president and co-owner. Dennis Farrell, Freedom’s former president and co-owner, has been consulting with the new company.
Pearson found that the sale “is in the best interests of the debtor [Freedom], its estate, creditors and other parties in interest.”
Freedom’s lawyers and the lawyers representing the bankrupt company’s creditors, argued Tuesday that the sale not only would bring in money but save Freedom the time and expense of dealing with the second property.
Freedom’s lead financial adviser told the court that maintaining the Nitro facility would distract the company from its first priority — cleaning up and tearing down its tank farm on the Elk River, the site of the Crude MCHM chemical leak that contaminated the Kanawha Valley’s water in January.
At the Tuesday hearing, Pearson delayed approval of legal bills submitted by Freedom’s cadre of lawyers and advisers and delayed Freedom’s request to hire a New York- and Los Angeles-based firm to facilitate the process of paying out possible administrative claims to people affected by the chemical leak.
Pearson said he wanted to see how the sale of Poca Blending would affect the company’s finances before he approved those expenses.
The five law firms, the financial adviser and the environmental consultant on Freedom’s payroll submitted bills totaling more than $1.8 million for services performed between Jan. 17, when the company filed for bankruptcy, and March 31.
“This case is cash-strapped,” Pearson said, before saying that the costs of running Freedom’s bankruptcy case through March were almost double the estimates.
In the days after Pearson expressed concern over the size of the legal fees, Freedom’s lawyers and advisers submitted more bills for April.
Those bills, for fees and expenses, total $306,897.33 for April.
Every firm representing Freedom, except for financial adviser Morris Anderson, submitted a bill this week.
Here is what Freedom’s professional counsels charged, in fees and expenses, for the month of April. All bills are subject to Pearson’s approval.
n McGuireWoods, bankruptcy counsel, $91,342.91.
n Pietragallo Gordon Alfano Bosick & Raspanti, special counsel, $45,515.55.
n Barth & Thompson, co-counsel, special conflicts counsel, $4,125.
n Civil & Environmental Consultants, special environmental consultants, $83,310.43.
n Babst, Calland, Clements & Zomnir, special environmental counsel, $51,378.14.
n Frost Brown Todd, counsel for the official committee of unsecured creditors, $31,225.30.
Reach David Gutman at email@example.com or 304-348-5119.