West Virginia Spill Company Wants to Sell to Related Business

By JONATHAN MATTISE | May 9, 2014

The now-bankrupt company at the center of West Virginia’s chemical spill wants to sell what’s left at its other site to a company tied to former executives.

Freedom Industries filed court motions Monday seeking permission to sell chemicals and property in Nitro at Poca Blending, which Freedom leases. Lexycon LLC would be the buyer.

Lexycon President Kevin Skiles and independent consultant Dennis Farrell are former Freedom executives. Lexycon was formed in Florida in March.

A Jan. 9 spill at Freedom’s main Charleston location contaminated 300,000 people’s tap water for four to 10 days. The facility along the Elk River is under state orders to be demolished. Federal investigators are currently carving up the tanks on site for evidence.

Freedom’s court motion says the Poca sale would save $387,000 in net costs. Freedom Chief Restructuring Officer Mark Welch said in the filings that the only option besides selling would be shuttering Poca operations, selling off inventory and demolishing the tanks. That process would take 40 days, Welch said.

Instead, Freedom is looking to sell to Lexycon for $575,000.

Lexycon took part in the International Coal Prep conference in Lexington, Kentucky last weekend. On the conference’s website, Lexycon uses Freedom’s logo. A summary paragraph of its business model closely mirrors that of Freedom.

“The opportunity to engage in this business was a result of the impending closing of Freedom Industries and the ultimate lay off of those (51) employees,” Lexycon’s website states.

Welch wrote that he encouraged Lexycon to seek out current and former Freedom employees.

The company’s website also says it has “no ties in any way” to Gary Southern, Freedom president. Welch said in bankruptcy filings that Southern’s friend, David Carson, is Lexycon’s principal. Carson also owns Dcar LLC, an Indiana company and former Freedom supplier with a claim against the spill company.

“To the best of my knowledge, information and belief, none of David Carson, Dcar, LLC nor Lexycon, LLC has ever been involved in the ownership or management of Freedom, and none are insiders of Freedom as I understand the definition of the term ‘insider’ under the Bankruptcy Code,” Welch wrote.

Dozens of businesses suing Freedom are among the creditors seeking its dwindling assets. Those cases remain frozen after Freedom filed for bankruptcy Jan. 17.

Freedom is back in bankruptcy court in Charleston on Tuesday. The company wants a judge’s approval so it can pay $1.9 million for services completed by lawyers and consultants. Judge Ronald Pearson wrote that the fees “raise concerns” about what financial resources will be left to remediate the spill site and wind down business operations.

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