There are so many things wrong with this picture ...
Freedom Industries, the West Virginia company whose chemical leak fouled the water supply for hundreds of thousands of West Virginians, lacks the assets to clean up their environmental mess. So they're filing for bankruptcy protection.
Apparently, if all goes well for Freedom Industries, they will get the taxpayer to pick up the tab for cleaning up their mess too.
Nice.
But, wait, it gets better.
According to the West Virginia Gazette the founder of Freedom Industries, Carl Kennedy II, pleaded guilty to income tax evasion in 2005 for not paying the government $1 million that he had withheld from employee paychecks. If this were an isolated incident this wouldn't really be important. Except it's not an isolated incident.
Today Freedom owes the IRS almost $2.5 million, which is part of a larger set of liabilities that totals about $6 million. Freedom Industries claims they don't have the money to pay their creditors.
Fortunately, Freedom has a couple of guardian angels. The bankruptcy code and a team of lawyers who understand the code. Check this out.
The owner of Freedom Industries, J. Clifford Forrest, filed to create a finance company that could lend up to $5 million to Freedom Industries. This is where the bankruptcy code's "debtor-in-possession" (DIP) financing laws come into play.
According DIP bankruptcy laws, Forrest's new company, Mountaineer Funding, automatically jumps to the head of the line, ahead of all other creditors, for repayment. All Forrests' new lending company has to do is loan enough money to Freedom Industries.
So, yeah, Forrest's old company - Freedom Industries - has secured bankruptcy protection. And they did it in a way that allows Forrest's brand spankin' new financial company - Mountaineer Funding - to get first dibs on pretty much all of the productive assets and valuable property that Freedom Industries possesses.
Corporate law at its finest.
But none of this should come as a surprise to anyone. Since 1992 Freedom and its associates have made 12 filings to found companies, to dissolve companies, and to merge companies around the same group of people.
Hiding behind bankruptcy and opaque corporate laws that protects a company more than it protects the interests of people is what has allowed Freedom to cheat the state out of taxes and, now, leave West Virginia and its citizens staring down an environmental and financial rat hole.
This appears to be the business strategy of choice for Freedom and it corporate associates.
Throw in the bailouts and favorable legislation for America's financial sector and we begin to see a larger picture of a broken economic system.
Interestingly enough, on the same day that Freedom Industries began spilling their toxic waste into West Virginia's rivers the Republican led House of Representatives passed a bill that guts toxic waste cleanup regulations in the United States.
At the end of the day, bankruptcy and legal sleights of hand appear to be par for the course for Freedom and its associates.
Unfortunately, what's happening with Freedom Industries is just one more example why I have been arguing that there's no functioning free market system in America.
- Mark
Apparently, if all goes well for Freedom Industries, they will get the taxpayer to pick up the tab for cleaning up their mess too.
Nice.
But, wait, it gets better.
According to the West Virginia Gazette the founder of Freedom Industries, Carl Kennedy II, pleaded guilty to income tax evasion in 2005 for not paying the government $1 million that he had withheld from employee paychecks. If this were an isolated incident this wouldn't really be important. Except it's not an isolated incident.
Today Freedom owes the IRS almost $2.5 million, which is part of a larger set of liabilities that totals about $6 million. Freedom Industries claims they don't have the money to pay their creditors.
Fortunately, Freedom has a couple of guardian angels. The bankruptcy code and a team of lawyers who understand the code. Check this out.
The owner of Freedom Industries, J. Clifford Forrest, filed to create a finance company that could lend up to $5 million to Freedom Industries. This is where the bankruptcy code's "debtor-in-possession" (DIP) financing laws come into play.
According DIP bankruptcy laws, Forrest's new company, Mountaineer Funding, automatically jumps to the head of the line, ahead of all other creditors, for repayment. All Forrests' new lending company has to do is loan enough money to Freedom Industries.
So, yeah, Forrest's old company - Freedom Industries - has secured bankruptcy protection. And they did it in a way that allows Forrest's brand spankin' new financial company - Mountaineer Funding - to get first dibs on pretty much all of the productive assets and valuable property that Freedom Industries possesses.
Corporate law at its finest.
But none of this should come as a surprise to anyone. Since 1992 Freedom and its associates have made 12 filings to found companies, to dissolve companies, and to merge companies around the same group of people.
Hiding behind bankruptcy and opaque corporate laws that protects a company more than it protects the interests of people is what has allowed Freedom to cheat the state out of taxes and, now, leave West Virginia and its citizens staring down an environmental and financial rat hole.
This appears to be the business strategy of choice for Freedom and it corporate associates.
Throw in the bailouts and favorable legislation for America's financial sector and we begin to see a larger picture of a broken economic system.
At the end of the day, bankruptcy and legal sleights of hand appear to be par for the course for Freedom and its associates.
Unfortunately, what's happening with Freedom Industries is just one more example why I have been arguing that there's no functioning free market system in America.
- Mark
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