Source: Charleston Daily Mail (WV), March 19, 2014
Posted on: http://envfpn.advisen.com
The chief restructuring officer that Freedom Industries may hire to help wind down business after its leak contaminated the water for 300,000 West Virginians won’t come cheap.
According to a motion filed by Freedom, Mark Welch will be paid either an hourly rate of $425 or a fixed weekly fee of $17,000 for the first six weeks and $12,750 after that, whichever is less.
Welch said his work will actually result in efficiency and savings.
He said the company will save about $1 million by hiring him.
Freedom’s motion was approved Tuesday by U.S. Bankruptcy Judge Ronald Pearson.
Pearson said Welch’s hiring marks a “substantial change in management” for Freedom. Welch said he doesn’t know how much additional services will be needed of the company’s current president Gary Southern.
At the beginning of the hearing, Pearson asked why existing officers couldn’t handle the wind down process. Welch responded Southern has been a “very good operator” and has stabilized operations. However, he said the next phase will be more difficult.
“It’s hard to balance the balls in the air in a short period of time,” Welch said, noting eliminating the amount of responsibilities would greatly help.
The court did not take up Southern’s Saturday motion to get paid. A committee of unsecured creditors intends to file an objection to this motion.
According to the Associated Press, Southern wants to be paid for his work during Freedom’s bankruptcy hearings. Court documents show Southern’s salary since joining the company full-time in January at $230,000.
Freedom’s CFO Terry Cline was present during the hearing; however, Southern was not. At the beginning of the hearing, Pearson said their presence may be needed for additional information.
Freedom filed a motion earlier this month to hire Welch of the Chicago-based Morris Anderson & Associates. Welch testified in Tuesday’s hearing that he has been at Freedom since Jan. 17, the same day the company at the heart of January’s chemical spill filed for Chapter 11 bankruptcy.
In his role as chief restructuring officer, Welch will report to J. Clifford Forrest, Freedom’s sole board member and primary equity holder.
Welch also will manage the wind-down process, assist in settlement or litigation of disputed claims, manage the sales process of Freedom’s assets, serve as Freedom’s representative before bankruptcy court, approve all environmental work and help prepare a Chapter 11 plan of liquidation.
Welch said he hopes Freedom will have $2-3 million left over after the first phase of the wind-down process ends in June. He said Freedom will cease operations at the end of this week.
Welch refused to comment to the Charleston Daily Mail at the conclusion of the hearing.
After the hearing, Anthony Majestro, who represents a creditor on the committee of unsecured creditors, said the expected amount of money left by June isn’t surprising.
He also said the amount isn’t enough to satisfy damages.
Welch said the biggest cost in the bankruptcy proceedings is addressing environmental issues. He also mentioned ongoing issues with getting rid of wastewater.
According to previous media reports, Hurricane Mayor Scott Edwards wants an injunction to stop the movement of waste water containing crude MCHM into a landfill along W.Va. 34 in Hurricane.
Since March 7, Freedom has shipped about 36,000 gallons of wastewater into the landfill, according to previous reports.
The court was scheduled to take up a final hearing on Freedom’s financial motion. However, the company recently withdrew that motion.
In recent court documents, Freedom sought to repay WV Funding the $3 million it initially borrowed and possibly work with the lender to have standby funding just in case something comes up in the future.
In one of the most recent hearings, Freedom’s attorneys said the company hasn’t needed to use the $3 million it previously borrowed from WV Funding LLC and agreed not to use this money through March 18.