As first noted in the recommended diary "WV Spill: Multi-Millionaire Tied to GOP Dark Money Fronts Freedom Bankruptcy Cash," several aspects of the bankruptcy protection sought by Freedom Industries are, putting it mildly, irregular. I looked for a follow-up diary and since I didn't find one, thought I'd do a quick post. Apologies if this was diaried already; it's a few days old.
Freedom Industries is responsible for the Elk River contamination in West Virginia. They claim that they cannot pay for the damages and have filed for chapter 11 bankruptcy. The bankruptcy judge said that this case is "one of the most unique Chapter 11 cases I've ever seen." For example:
About an hour after Freedom filed for bankruptcy Friday, the company filed an emergency motion for "debtor-in-possession" (DIP) financing, which would allow it to secure a loan up to $5 million to continue to function in some capacity. The loan would, according to the filing, "provide additional liquidity to [Freedom] in order to allow it to continue as a going concern."
DIP lenders are often among the first agencies to get their money back from bankrupt companies.
Freedom's proposed DIP lender is WV Funding LLC, which was incorporated in West Virginia on Friday, the day Freedom filed bankruptcy.
WV Funding's one listed member is a company called Mountaineer Funding LLC. Mountaineer Funding also was founded Friday, according to filings with the Secretary of State's Office. There is also a space for Mountaineer Funding to sign on the DIP agreement.
In a filing Sunday, West Virginia American Water Co. asked the judge to deny Freedom Industries' request for a loan, which the water company said "smells of collusion."
In its bankruptcy filing, Freedom described the DIP agreement as being negotiated between the parties "in good faith and at arms-length." But the water company notes the fact that the DIP lender that owns Freedom isn't disclosed in the bankruptcy filings.
What's the term I'm looking for? Shell game?