What Water Gremlin's bankruptcy filing means for the company, community after pollution debacle
WHITE BEAR TOWNSHIP, Minn. — A manufacturing plant at the center of a years-long WCCO investigation is filing for bankruptcy. It comes as Water Gremlin faces more than 95 civil lawsuits.
The company noted the accusations of causing cancer — even death — prompted the company to file.
WCCO has been reporting on developments at the White Bear Township plant since 2019. It started after the discovery of elevated and excessive emissions of a toxic chemical called TCE.
Water Gremlin filed for Chapter 11 bankruptcy. Attorney Roger Maldonado with firm Faegre Drinker, who is not affiliated with the case, reviewed the documents.
TIMELINE: Water Gremlin's pollution violations and WCCO's investigation
"They actually have more assets than liabilities, so it looks like it was a working successful, functioning company," Maldonado said.
At the time of filing, the company that makes battery terminals listed $65.7 million in assets and $27.8 million in liabilities — or nearly $38 million in capital. They owed $21 million to a bank, and less for things like recycling, roof services, property taxes, utilities and more.
And then there's the pending civil suits.
"They filed this bankruptcy to deal with the mass claims against them," Maldonado said.
Ninety-five civil lawsuits from people who live nearby accuse Water Gremlin of causing cancer, chronic illness and wrongful death.
Claims stem from the plant's elevated and excessive emission of the now-banned toxic chemical TCE.
"While at first it might seem kind of like an escape plan, it really isn't because those claims are still there. It's really a time out. And here, once those complaints were served, I think that's what prompted was to say, ok we have to deal with these 95 claims. How are we going to do that," Maldonado said.
Maldonado says there's no telling if going before a judge, mediating a settlement or this bankruptcy would be better financially for the impacted community. He thinks the most likely scenario now is the court will set up a settlement trust.
And it could leave a door open for people who get sick in the future to file for funds.
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"How do we address all these claims equitably, efficiently and make people resolve these claims and the bankruptcy code provides for that," Maldonado said.
Amidst bankruptcy, the White Bear Township manufacturing plant is in motion to offload its operation.
"Right now, Water Gremlin and their attorneys are really focused on the sale process. They want to try to bring in as much value as possible and then after that is really when they're going to shift over to the plan and say ok how are we going to address all these competing interests," Maldonado said.
Bids to buy Water Gremlin are due this week. Then there will be an auction, and potential approval of sale, all before the end of the year.
"By trying to do the sale process as soon as possible, that really brings some value to everyone. It's just after that that's really where things will need to be addressed in terms of the unsecured creditors, the plaintiffs," Maldonado said.
WCCO reached out to Water Gremlin. It had no updated comment to the one it provided on Nov. 1:
"We have chosen this path to help position Water Gremlin for future success and provide an appropriate forum for definitively resolving pending litigation regarding the past use of TCE. During this process, we remain focused on serving our customers with the same level of excellence they have come to expect, and we are as committed as ever to our talented workforce and the broader White Bear Township community. We will continue to meet current regulatory standards."
