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I try to write a little bit more, still not the most important things, because I don't understand them.

Chris Hayes in "All in with Chris Hayes" this evening has amazingly mind boggling new exclusive facts revealed. I can't even put it together, it is so unbelievably weird.

Someone has a look at tonight's video and explain how it is possible something like this is even possible.

Truth behind Freedom Industries Bancruptcy

Put this in writing for the record. Please.

Ok, I try to write at least something:

According to the Washington Post:

Pennsylvania coal mining executive Cliff Forrest is the new owner of Freedom Industries since Dec. 31. He discovered that one of the six-decade-old storage tanks he had acquired was leaking a toxic chemical into the Elk River that supplies water to about 300,000 West Virginians.

It took just one more week for Freedom Industries, facing about 20 lawsuits and a Justice Department investigation, to declare bankruptcy. On Friday, the besieged company filed for protection under Chapter 11 in the U.S. Bankruptcy Court in Charleston, W. Va.

It’s been a pretty good business niche. Freedom Industries has bought and stored chemicals from the likes of Eastman Chemical, an international $12 billion business, and Georgia Pacific Chemicals, a unit of the Koch brothers’ Georgia Pacific, a global paper product giants. Then Freedom Industries sells to companies such as Alpha Natural Resources, one of the country’s biggest coal producers. More than 100 plants in West Virginia use froth flotation.

Forrest, through another firm he owns, paid roughly $20 million to acquire Freedom Industries and orchestrate its Dec. 31 merger with four tiny distribution, blending and storage firms that act as middle men between big chemical and big coal companies, according to a person close to the company but not authorized to speak for it. He added that Forrest just “had the misfortune of buying a plant just before all hell broke loose.”

Freedom Industries issued a statement on Jan. 10. ... Chief executive Gary Southern, suffering from pneumonia, made one brief and awkward appearance sipping from a water bottle before TV cameras. Two days later, Charles Ryan, the crisis public relations firm Freedom Industries hired, dropped the company.

...
Temin said such companies “go underground, though unfortunately in this case their underground is toxic.” And if they’re truly avoiding the spotlight, then “tomorrow you will no longer be Freedom Industries, it will be Liberty Industries or Apple Pie Industries.”

So what Chris Hayes said is that today the company Mounteneer Funding LLC has been incorporated by the same person Cliff Forrest who owns Freedom Industries just since DEc 31rst.

So from here on I can't write anything that I feel I understand. Therefore I asked others to try to find out what it means. What is the "profit" for Mounteneer Funding LLC in doing this? And what is the relation with the water treatment facilities of WV?

According to Huffington Post West Virginia's water is owned in a private-public partnership:

In late 2009, the state gave final approval [PDF] for a public-private partnership between Boone County and West Virginia American Water Company -- the utility that owns the treatment facility and water distribution network shut down since last Thursday -- for a multi-million dollar project to run water lines out to Prenter and nearby communities. The project was mostly paid for by a federal Housing and Urban Development grant, with Boone County and West Virginia American Water Company making up the difference. Not a penny was paid by the coal companies that polluted the water in the first place.
...
The real motivation for the project is found further down in the engineering report, which details the expected economic development benefits: "The extension Project will help satisfy mine permitting requirements for Arch Coal's proposed Mountain Laurel mine."
...
The West Virginia chemical spill is a cautionary tale for communities all over the country where multinational companies are coming in and buying up municipal water utilities to manage people's drinking water supply for profit. And factors beyond groundwater pollution by the coal industry are driving those trends, such as systemic under-investment in public water systems by federal, state and local governments, and the rapaciousness with which private companies, aided by political favoritism and lobbying, are pursuing expansion of their influence, customer base and profit margins.
All I understand is that the privatization of the water is profitable for the coal companies that want to implement new mining technologies of the proposed Mountain Laurel mine. Better they have all the water they need under control, I guess...

oh man, that's all so complicated for me to understand and sooooo wrong. Some professional writer put this all together, please.

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Comment Preferences

  •  Freedom's Just Another Word For Nothin Left to Sue (18+ / 0-)

    We are called to speak for the weak, for the voiceless, for victims of our nation and for those it calls enemy.... --ML King "Beyond Vietnam"

    by Gooserock on Fri Jan 17, 2014 at 07:59:33 PM PST

  •  Evidence of criminality? (8+ / 0-)

    I saw it too, and you are perhaps understating the case by calling it just weird.  What Kennedy has done looks like an attempt to hide from the law and evade any consequences.  It looks remarkably stupid to me, but what do I know.  I wasn't clear though on the timing.  I hope that instead of protection, it betrays him when consequences are imposed.  We'll see.

  •  The video takes for ever to load here (1+ / 0-)
    Recommended by:
    Horace Boothroyd III

    can you get it to load normally?

  •  Thanks for posting, (9+ / 0-)

    this is the first I've seen of the legal shuck and jive.

    When corporations have more power than people, they will prosper and the people will suffer. A corporation is NOT a person; it has no conscience and no shame, it's a document in a safe somewhere that allows sociopaths to avoid responsibility for their crimes.

    This is the path we are on as a country if we don't get corporate money out of politics. Throwing a few of these assholes in jail might help too.

    Some days it's not even worth chewing through the restraints!

    by SpotTheCat on Fri Jan 17, 2014 at 08:24:06 PM PST

  •  Not unlike Peabody Energy spinning off... (19+ / 0-)

    ... Patriot Coal to hold all of Peabody's pension and retire health obligations, then having Patriot declare bankruptcy.

    The retirees and workers are out of luck, and it's all legal.

    Corporate welfare at it's very worst, as these companies walk away from their responsibilities.

    And food stamp recipients or those receiving unemployment benefits are "loafers" or "freeloaders?"

    Really?

    "Bob Johnson doesn't have special privileges, because really, why would I entrust that guy with ANYTHING?" - kos, November 9, 2013

    by Bob Johnson on Fri Jan 17, 2014 at 08:28:44 PM PST

    •  Bob, the facts here seem very different (1+ / 0-)
      Recommended by:
      coffeetalk

      than Peabody Energy. When the new owner purchased the company just a few weeks ago for $20 million I don't think he did it with the intention of putting it in a chapter 11 process where his $20 million will be gone in nanoseconds.

      "let's talk about that"

      by VClib on Fri Jan 17, 2014 at 09:22:52 PM PST

      [ Parent ]

      •  But it seems he knew how to help himself (4+ / 0-)

        by incorporating a new company that "saves" the butt of his bancrupt Freedom Industries. I just don't understand how that works, financially speaking. I don't know how bankruptcies are handled. Doesn't get  Mounteneer Financing LLC,  money from somewhere to finance the bankrupt Freedom Industries to "get back on their feet" ? Which money is Mounteneer Financing LLC using? How doe they get it?

        •  The money for MF, LLC is coming from the owner (2+ / 0-)
          Recommended by:
          coffeetalk, doc2

          of Freedom, but through an independent entity. I am no expert but when a company goes into Chapter 11 it still needs cash to operate. If an entity is willing to loan Freedom money while they are in Chapter 11 that group becomes the senior creditor. By having MF step in as the lender of last resort the owner of both Freedom and MF continues to control all the assets. However, the funding of MF is new cash the owner it putting at risk. The cash didn't come from Freedom. This is all very common and legal.

          "let's talk about that"

          by VClib on Fri Jan 17, 2014 at 09:39:37 PM PST

          [ Parent ]

          •  If MF owner is the same person as the owner of (2+ / 0-)
            Recommended by:
            rat racer, OldDragon

            Freedom Industries, and Freedom Industries is bankcrupt, how is the MF owner, who is the same bankcrupt Freedom Industry owner, then all of the sudden blessed with lot of new cash? I mean if Freedom Industries owner had cash, he wouldn't have to file bankcruptcy, right? Or is he holding the personal money out of it, because it's a corporation and he doesn't have to...

            If you ask me corporations' owners should be responsible with their own private money for the debt they go into, like normal sole proprietorship business owners have to. Corporations abuse their corporate laws as to not have to be personally responsible for the debt their corporations accumulate. But what do I know. You can tell me a lot of things, I won't get it.

            •  corporate "persons" (2+ / 0-)
              Recommended by:
              VClib, doc2

              are legally separate entities from their owners. "Freedom" Industries is bankrupt but their owner is not.

            •  If an owner had to be personally liable for (3+ / 0-)
              Recommended by:
              VClib, doc2, nextstep

              all the debts of a business, no one would invest in a business.  

              Think about it -- would you invest your retirement money in mutual funds if that meant you personally could be sued -- and lose your own assets like your house -- if one of the businesses the mutual fund invested in did something wrong?  

              On a smaller scale, think about it this way. A business is liable for the acts of its employees, for example.  If I own a restaurant, say I hire 20 people to work in the kitchen or as wait staff. The business is responsible for anything each of those 20 people do on the job, so if one of those people accidentally drops something heaving on someone else and seriously injures or kills them,  I could lose everything I've invested in the business (and all the years of working to make it successful).  I might take that risk, especially if I can get the business insured to lessen that risk.  There's no way, however, I hire other people that I don't know if something that any one of them does could cost me my house, my car, my personal savings everything I personally own.

              Allowing businesses to be separate entities through corporations, LLC's, LP's, etc. (there are various forms) is the only way you will get people to invest in a business where they put their fate in the hands of other people they don't know.  That essentially limits their losses to the amount they invested if one of those other people does something bad.

              •  I understand that part, but to be frank, (1+ / 0-)
                Recommended by:
                Capt Crunch

                thousands of "little" people, who invested in mutual funds for retirement savings have lost their money in them, so much so that they went bankcrupt and had to sell their homes or make huge sacrifices.

                I don't see where, when I have put my money into a corporate business and with it put my trust and the fate of my money in the hands of other people, where I can hold them accountable if the people I trusted failed miserably or abused whatever sneaky loopholes I as Dumpkopfen housewife don't understand. Apparently the "corporate" person can't be "punished" in a way that would help the "little" people, ie they don't get their money back. Isn't it that most often the "punishment" for "corporate persons" is to ask them to pay huge "fines"? And isn't it that those "corporate persons" always can find easily other "coroporate persons" that just have the cash and nothing else happens?

                I think they should be punishes in a way that it hurts. Sorry. The little people, who lost their retirement savings hurt a lot. But the "corporate persons" go on living unharmed and are just dandy.

                Something in those corporate laws are not right and fair. I wished I had the education to understand  what exactly it is.

                Sorry for even commenting here. I know I can't say something that makes sense. But my hunch is so can't millions of "little" people, who get screwed over all the time.

                 

                •  There's a huge difference (4+ / 0-)
                  Recommended by:
                  mimi, doc2, nextstep, VClib

                  The people who invest in mutual funds have limited their possible losses to the amount they invested in a company.  If I invest $1000 in ABC company stock, the limit to what I can lose if ABC Company does really bad things is $1000.  Without limited liability, if I invest $1000 in ABC Company Stock, and ABC Company does something that causes billions of dollars, then my $1000 investment means I not only lose the $1000, but someone can sue me for maybe another $100,0000.

                  No sane person would invest $1000 in a company if paying that money potentially puts them on the hook for some unlimited amount.  

                  Without recognition of a business as a separate entity, and a limit on liability for the owners, the economy would shut down.  All you'd have are mom and businesses. You'd never have businesses large enough to make cars, furniture, provide insurance, make tv's, operate airlines, transport goods, on and on and on . . .

                  And bankruptcy does "hurt" the owners of the company.  The owners of the company lose their investment.  

                  And if the officers or directors did something criminal, they can -- and should --  be held personally responsible for that.  See Andrew Fastow.

            •  mimi - one of the specific reasons people (3+ / 0-)
              Recommended by:
              doc2, mimi, koNko

              form corporations, or other limited liability entities, is that their personal assets, beyond what has been invested, is not at risk. That is clearly different from a sole proprietorship, and some forms of partnerships, where personal assets are at risk. Even most small businesses are now structured using limited liability entities so that if the business doesn't survive the owners aren't completely wiped out of their personal assets as well.

              "let's talk about that"

              by VClib on Sat Jan 18, 2014 at 08:08:16 AM PST

              [ Parent ]

              •  I know that, (1+ / 0-)
                Recommended by:
                koNko

                I even incorporated once a business that existed just in the ether of the digital world. When I did that I got that part understood and wondered about "how nice that is".

                All I am saying is that I believe that corporations got too much of a good deal in that those "corporate persons", who manage the corporartions, not only are never wiped out, but apparently have the options just to go one from one "corporation" to the next without ever have to any kind of penalties for their mismanagement that would hurt them personally.

                The construct seems to be too good to be fair and just compared to "non corporate" persons.

      •  Not the point, VC. (2+ / 0-)
        Recommended by:
        OldDragon, mimi

        The point is, the laws are written in such a way that these corporations and execs can pull this crap legally.

        "Bob Johnson doesn't have special privileges, because really, why would I entrust that guy with ANYTHING?" - kos, November 9, 2013

        by Bob Johnson on Sat Jan 18, 2014 at 06:12:03 AM PST

        [ Parent ]

        •  What are they "pulling"? (2+ / 0-)
          Recommended by:
          VClib, doc2

          What's happening is a Court is essentially taking over the finances of the company for the purposes of seeing that the  money and assets of the company are used to pay the creditors -- the people the company owes money to.  

          It means that the company doesn't have enough money and assets to pay off all the debts, including what it owes as a result of the contamination.  So the Court will get together all the money/assets it has, and decide how to best pay all the debts it owes.  

  •  This guy's tweets seem to have broken the story (8+ / 0-)

    https://twitter.com/...

    I'd embed, but there's a series of them from about six-seven hours ago.

    Disclaimer: If the above comment can possibly be construed as snark, it probably is.

    by grubber on Fri Jan 17, 2014 at 08:37:06 PM PST

    •  yes, meanwhile I ran into this article (7+ / 0-)

      Freedom executive Kennedy had felonies in which something is explained about the Freedom Industries:

      In 2008, Freedom Industries secured a contract to distribute a line of products called Talon that are used as a binder in coal processing, according to a news release issued at the time. Freedom distributed Talon to eight states, including West Virginia.

      "We are excited to offer our customers inventive products like Talon that push past the status quo in coal recovery to bring profit and productivity benefits to mining preparation plants," Joshua Herzing, a Freedom executive, said in the press release.

      Talon is made by Georgia-Pacific Chemicals LLC. Georgia-Pacific is owned by the billionaire industrialists Charles and David Koch.

      The Koch brothers have, through a conservative group called Americans for Prosperity, spent millions of dollars campaigning against a wide array of environmental regulations.

      On Saturday, Americans for Prosperity set up a water distribution site at Columbia Gas in Charleston.

      Above my paygrade ...
  •  There is another troubling aspect to all of this (8+ / 0-)

    that was mentioned in another Diary today.  This chemical has been used by Coal companies for a number of years...so what happened to it?  Did it evaporate, get dumped into the ground or what?  
    I don't think we've seen the end of this environmental disaster.

    "It took us a couple of days because I like to know what I'm talking about before I speak." President Barack Obama 3/24/09

    by sfcouple on Fri Jan 17, 2014 at 09:24:44 PM PST

    •  In general, (8+ / 0-)

      it takes epidemiologists 20 years to see the effects in populations.

      Georgia-Pacific, a subsidiary of Koch Industries, is being linked to cancer because of the chemical used in its plant in Crosett, Ark.:

      WASHINGTON -- David Bouie, a 64-year-old resident of Crossett, Ark., says something isn't right on Penn Road. In the 15 homes on his street, 11 people have recently died of cancer. The casualties include George Parker and his wife, Ollie Parker, as well as Bobbie Sue Gibbs and her neighbor Tom Perkins, both of whom passed away with multiple cancers. Dolores Wimberly, a former neighborhood resident, says her daughter Laetitia, a nonsmoker, died of lung cancer at 43; and Penn Road resident Norma Thompson says her husband died of lung cancer, while she continues to have breathing problems, often relying on a respirator.

      "Whenever we take a trip out of town, our respiratory system seems to get better," said David Bouie's wife, Barbara, who has spent her entire life in Crossett, the largest city in Ashley County. "I don't have trouble breathing, or use my eye drops, or anything. But when we come home, it starts all over again -- the headache, everything."

      http://www.huffingtonpost.com/...

      Cancer risks for Koch profits is a brief documentary by Brave New Films that documents it.

      "Let each unique song be sung and the spell of differentiation be broken" - Winter Rabbit

      by cotterperson on Fri Jan 17, 2014 at 09:43:29 PM PST

      [ Parent ]

      •  Thank you for this information, discouraging (3+ / 0-)
        Recommended by:
        jan4insight, jayden, cotterperson

        as it is.  It is sad how some will endanger the lives of thousands to add another zero to their bank account---money they don't need but just want.  

        "It took us a couple of days because I like to know what I'm talking about before I speak." President Barack Obama 3/24/09

        by sfcouple on Fri Jan 17, 2014 at 10:22:38 PM PST

        [ Parent ]

  •  can't help but wonder if Freedom knew (3+ / 0-)
    Recommended by:
    jan4insight, jayden, viral

    the leak had either started or that one would inevitably start soon before the sale on December 31? For whatever reason.

    Power to the Peaceful!

    by misterwade on Fri Jan 17, 2014 at 09:53:56 PM PST

  •  Part of the document (4+ / 0-)

    shown, but not highlighted, by Hayes is exactly what happened when our regional landfill was abandoned by the other counties that belong to the district. The bankruptcy was:

    instituted for the purpose of enabling the Debtor to meet ongoing operational expenses and maximize the value of the Debtor's estate

    (my transcription)

    It is clearly to protect the "Debtors" who have polluted the area and want to benefit from the bankruptcy. During our local hooh-hah, one of the Koch-trained teabaggers made just this point. Our local guy learned this by attending Koch Bros "educational training."

    Our opposition decried that as "immoral," which this clearly is as well on a much larger scale.

    Nothing matters except maximizing profits.

    "Let each unique song be sung and the spell of differentiation be broken" - Winter Rabbit

    by cotterperson on Fri Jan 17, 2014 at 09:55:04 PM PST

    •  In the context of bankruptcy law, (3+ / 0-)
      Recommended by:
      LamontCranston, cotterperson, VClib

      "maximiz[ing] the value of the Debtor's estate" means preserving - in this case - the business debtor as an ongoing concern, ie. a more equitable ('valuable') resolution arises if the business can stay in business than if the business just dissolves in bankruptcy.

      It'll be interesting to see how the judge handles this case.  Ordinarily, creditors benefit, somehow, from a debtor business being able to continue to operate, reorganize and emerge from bankruptcy.  In this instance, though, the owner of the debtor is just saving his own ass by lending the money and shedding the liabilities (except for the IRS debt which will have to be paid).  It skirts being an abuse of the court, IMO.

    •  No -- maximizing the Debtor's estate (2+ / 0-)
      Recommended by:
      cotterperson, VClib

      in the bankruptcy context means getting the most money together to pay the people that the Debtor owes money to -- including, in this case, the people who suffered because of the water contamination.  

      In a bankruptcy, the COURT controls the "Debtor's estate."  The Court's job is to see that the creditors -- the people owed money -- get paid.  A Chapter 11, where the Debtor continues operating, is what they allow if the Court believes that the entity can best pay off debts by continuing to operate.  It may converted to a Chapter 7 if it's determined that there's no way they can come close to ever paying off all creditors.  In that case, the Court will still "maximize the Debtor's estate" -- i.e., get together as much money and assets possible in the Debtor's estate for paying off as much of what the Debtor owes as possible.  

      Either way, the Debtor's estate is first and foremost for paying the creditors.

    •  cottorperson - I think you are misreading (1+ / 0-)
      Recommended by:
      cotterperson

      the document. coffeetalk has a good explanation of the terms in her comment.

      "let's talk about that"

      by VClib on Sat Jan 18, 2014 at 03:11:52 PM PST

      [ Parent ]

  •  Forrest is taking a huge loss here, it seems. (2+ / 0-)
    Recommended by:
    doc2, nextstep

    There's no profit in this for him.  It appears that he bought a company for $20 million, and that $20 million disappeared in a matter of days, since the company he bought is now in bankruptcy.  

    Some people seem to regard this kind o bankruptcy as a corporate ploy to increase profits.  The owners of a company that files for bankruptcy are one of the losers.  The bankruptcy judge now gets to oversee what happens, and his/her job is to see what's the best avenue for paying off the creditors - and the creditors, I suspect, will include the people who were hurt by the water contamination. The fact seems to be that this company does not have the money and/or assets to pay those debts.

    •  The diarist admits that she doesn't understand (1+ / 0-)
      Recommended by:
      coffeetalk

      this, to be fair (though seems to be horrified by it nevertheless). The real story seems to be "when buying a company, do your due diligence".

      •  the spill could have been an accident (0+ / 0-)

        like a damage to the tank that was not due to "decay of the tank" and it could be that the new owner did his due diligence and couldn't expect that tank to leak.

        I don't think that your comment makes sense other than to confuse and obtuse the issue.

    •  I can follow all you say, but I still don't (0+ / 0-)

      understand, if the court as you say "controls the Debtor's estate", what difference does it make to Cliff Forrest to become the owner of Mountaineer Funding or not?  If the court controls the Debtor's estate, does that mean Mountaineer Funding owner Cliff Forrest has no control over the debtor's estate? If that would be so, what kind of interest would he have to incorporate this new restructuring company? And is there really no new, additional money flowing into Mountaineer Funding to actually process the distribution of the Freedom Industries estate? Is Mountaineer Funding not bound what the court orders? I still don't get it. There must be a  reason, why Cliff Forrest thinks it's a good idea to incorporate Mountaineer Funding. But you say it's the court who control's the debtor estate? What don't I get here?

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