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Freedom Industries Inc., whose leaking chemical tank made much of West Virginia’s water undrinkable early this year, filed a proposed Chapter 11 plan this week that offers nothing to people with claims for polluted water.

Instead, proceeds from a settlement with ÌìÃÀÍøÕ¾´«Ã½´«Ã½ Specialty Insurance Co. will go to nonprofit organizations benefiting the community harmed by the spill.

Freedom filed for Chapter 11 protection in January, eight days after officials found a tank at its Etowah River Terminal leaking 4-methylcyclohexane methanol, a chemical used in coal processing. The spill made water undrinkable for a time for 300,000 West Virginia residents.

After determining reorganization wasn’t possible, Charleston, West Virginia-based Freedom decided to liquidate and filed a plan on Aug. 18 with input from the official unsecured creditor’s committee.

Freedom has $4.5 million in cash on hand. After paying professionals and other creditors entitled to priority, it expects to have $834,000 for unsecured creditors’ claims, which may total $8.5 million.

Assuming the claims don’t come in higher, unsecured creditors will get a 9.8 percent recovery, according to the explanatory disclosure statement.

There’s also a class action on behalf of everyone else with claims arising from the spill. Freedom has a tentative settlement for the class to receive $2.9 million from ÌìÃÀÍøÕ¾´«Ã½´«Ã½. The agreement takes up almost all of the $3 million in coverage provided by the policy.

The bankruptcy judge may not rule on the ÌìÃÀÍøÕ¾´«Ã½´«Ã½ settlement until next month.

The money from ÌìÃÀÍøÕ¾´«Ã½´«Ã½ earmarked for the class won’t go to the claimants themselves. Rather, a committee representing people with pollution-related claims will give the insurance proceeds to nonprofit organizations “for the general good of the community of Charleston.”

Freedom said the cost of the cleanup was $5.2 million, along with $1 million in cleanup-related professional fees.

Citing the potential for a competing proposal, Freedom this week asked the judge to extend its exclusive right to present a plan. If the extension is granted, the company’s exclusivity will be pushed back to Nov. 7.

Freedom is demolishing the tank farm that caused the spill. The judge approved selling a 79-tank blending plant in Nitro, West Virginia, for $575,000.

The case is In re Freedom Industries Inc., 14-bk-20017, U.S. Bankruptcy Court, Southern District of West Virginia (Charleston).

Topics Virginia ÌìÃÀÍøÕ¾´«Ã½´«Ã½