West Virginia Spill Firm CEO Seeks Paycheck, Insurance Cover for Legal Fees

The president of the company that spilled chemicals into 300,000 West Virginians’ water supply wants to get paid for work during bankruptcy proceedings.

In court documents Saturday, Freedom Industries President Gary Southern requested an order to cash paychecks for work following the company’s Jan. 17 bankruptcy filing.

The documents list Southern’s salary since joining the company full-time in January at $230,000. Southern became president Jan. 1 when parent company Chemstream Holdings Inc. purchased Freedom Industries.

Court records show Freedom Industries also paid about $5 million the year preceding the bankruptcy to two contractors that employed Southern — Enviromine and Blackwater.

Southern last received a Freedom Industries paycheck covering his services through Jan. 19.

The court papers say Southern worked 12 to 16 hours a day for 46 straight days up to Feb. 26. Subsequently, as of the first week in March, Southern has been working 10 and 12 hour days and been on-call over weekends.

Southern has been in charge of remediating the environmental damage at the company’s Charleston headquarters. He also heads the company’s efforts to wind down its 51-employee operations, including selling off or otherwise moving chemicals from its facilities. The company also hit a deadline last Saturday to start demolishing its tanks in Charleston, per state orders.

“Southern’s continued employment by the Debtor is essential to achieving a successful result in this case, and thus is entitled to administrative expense priority,” Southern’s lawyer, Steven L. Thomas, wrote in the court document.

Hundreds of creditors are trying to collect money owed by Freedom Industries. Some include citizens and businesses who sued the company over lost wages and profits incurred because of a water-use ban. The Jan. 9 spill spurred the order against using tap water for four to 10 days in some areas.

Southern’s counsel wrote that it was unclear if a previous court order allowed Southern to get paid after the bankruptcy filing, so Southern hasn’t been paid since.

Southern is requesting that his paychecks be negotiated and issued until Freedom Industries can appoint a chief restructuring officer. The new officer would receive over $72,000 a month for six weeks, and $54,000 monthly afterward, court documents state.

Freedom Industries will discuss hiring the chief restructuring officer in bankruptcy court Tuesday.

Judge Ronald G. Pearson expressed concerns over how much the officer would get paid, writing in a court filing that there is “considerable concern with respect to rate of compensation and the extent to which this employment service could dissipate assets in this case.”

Southern is also seeking the bankruptcy court’s approval to let Freedom Industries and its insurance policy cover the executive’s legal fees. Court documents show Southern has accumulated almost $49,000 in legal costs for representation in two civil lawsuits and in state and federal investigations.

The court documents cite company bylaws, which spell out liability protections for top executives.