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Amid bankruptcy, Tonawanda Coke still owes $2 million to community

Tonawanda Coke Corp. has filed for bankruptcy, just days after telling government regulators it planned to shut down its Town of Tonawanda facility following a long fight with them over emissions.

The Chapter 11 bankruptcy filing would allow the company to reorganize its operations, although Tonawanda Coke said in court documents that it does not expect to have enough money to repay any of its unsecured creditors.

The company said it had between $10 million and $50 million in assets, along with a similar amount of liabilities.

Meanwhile, the last of the 30 coke ovens that were in operation at the site were shut down on Monday, the state Department of Environmental Conservation said. Workers will continue purging the site's extensive system of gas lines and cooling its battery ovens throughout the week, the agency said.

The DEC said it and the U.S. Environmental Protection Agency will keep a close eye on conditions at the site and will oversee the investigation and remediation of contamination there. The state agency said it will provide regular updates to the public on activity at Tonawanda Coke.

“With the shutdown of the last 30 coke ovens at Tonawanda Coke, we are moving this community one step closer to being free of this facility’s billowing smokestacks,” DEC Commissioner Basil Seggos said in a statement Tuesday.

In addition, U.S. District Court Judge William M. Skretny Tuesday denied motions by Tonawanda Coke to reconsider a court decision late last week requiring the company to immediately remit its final $2 million community service payment and provide financial records to the federal probation department.

"This court finds no cause for reconsideration," Skretny said. "Tonawanda Coke's final community service payment therefore remains due ... as of Oct. 12, 2018, and it remains obligated to provide financial information to the government and the probation office as directed."

The judge, however, extended the date for the company to submit financial disclosures to Oct. 24, "in light of its recent bankruptcy filing and the ongoing shutdown of the facility."

The bankruptcy filing came less than a week after Tonawanda Coke informed federal and state agencies that it was "in such bad financial straits that they had payroll only for one week," according to an affidavit from Harish Patel, environmental engineer with the senior enforcement team in the air compliance branch of the EPA.

In light of the bankruptcy, community activists from the Clean Air Coalition of Western New York called for Tonawanda Coke's leaders, including CEO Paul Saffrin and company trustees, to be held personally responsible for the company's debts, including the pensions and retirement benefits for workers, the costs of their medical monitoring and of the site's remediation.

"The Tonawanda Coke site sits on the Niagara River, and in a residential community and a neighborhood of families with children," the Clean Air Coalition statement said. "It is the responsibility of Tonawanda Coke leadership to clean up their mess, and not put this unjust burden on families in Western New York."

Saffrin was not available this afternoon for comment, a Tonawanda Coke official said when reached by telephone.

Tonawanda Coke was convicted in 2013 of violating the Clean Air Act and ordered to pay $25 million in fines and environmental studies. The company, which has been under fire for months from state and federal environmental agencies, started shutting down the plant Sunday.

In the filing, the company said its River Road facility "poses or is alleged to pose a threat of imminent and identifiable hazard to public health or safety."

With respect to its motion for Skretny to extend the company's time for remitting its final payment and financial documents, attorneys for Tonawanda Coke said they didn't have adequate ability to respond to the prosecution's motion and that the company "was at all times acting in good faith to comply with this court's recent modifications of probation."

The company submitted a pair of exhibits and statements by Richard Westbrook, a licensed professional engineer who was retained by Tonawanda Coke in July to help fix its equipment issues that were leading to illegal opacity violations from its smokestack, and Charles Lauricella, the 18-year veteran plant engineer for the company.

The statements and data submitted by Tonawanda Coke's attorneys show the repairs being made cut opacity from the facility's smokestacks by half over the last two months.

An exhibit submitted to federal court Monday by Tonawanda Coke's lawyers showed progress was being made in reducing the opacity violations that resulted in the court finding the company guilty of violating its probation from its 2014 criminal case. (U.S. District Court exhibit)

Jeffrey C. Stravino, a Hodgson Russ attorney representing Tonawanda Coke, said in court documents that the company "did everything possible to comply" with Skretny's Sept. 21 order and to secure financing for its last community service payment.

"The decision to shut down and file for bankruptcy was difficult," according to Stravino's statement to the court. "It affects customers, vendors and, most importantly, Tonawanda Coke's valued employees."

He added: "Tonawanda Coke Corp. fought vigorously against attempts to shut down and only made this decision when it became clear that it could not continue to pay for the repairs, expenses associated with the government actions and its employees to keep working."

The company also sought to clarify the court record about an agreement it said it had with the U.S. Attorney's Office to keep news of the company's planned Oct. 16 closing confidential on Friday and why that confidentiality was necessary.

"I explained that the information needed to be kept confidential to ensure that employees continued to operate the battery before and during the shutdown," Stravino stated. "If employees stopped showing up for their shifts, there could be serious issues with the battery and, consequently, safety risks – including fires and explosions – for workers and the surrounding community."

Stravino added: "Disgruntled workers (which exist in any company) could also take out their frustration about losing their jobs on the battery and cause damage that could also lead to safety issues."

Prosecutors filed papers opposing Tonawanda Coke's motions regarding the $2 million community service payment and disclosing the financial records to the federal government.

"There is no basis for this court to modify its prior order immediately making due the final community service payment," the U.S. Attorney's Office said.

It also opposed the company's request to delay providing its financial statements that include: federal tax returns for 2017 and 2018, financial statements for 2015 to 2018, inventory, accounts receivable, plant and equipment documents and other financial information.

"A substantial payment is currently due and owing to the government, and with the looming bankruptcy of Tonawanda Coke, the government is justified in moving swiftly to secure that payment," the U.S. Attorney's Office said.

The company has been under scrutiny for months, and the pressure on Tonawanda Coke intensified last week.

The DEC cited Tonawanda Coke in July for violating its air quality permits almost 120 times between May 18 and July 6 and releasing emissions that exceeded regulatory standards for opacity. A federal judge in September ruled that the company violated the terms of its probation from a 2013 criminal conviction for violating the Clean Air Act but allowed the plant to remain open.

With state regulators pushing to revoke the company's air permit, an administrative hearing that had been scheduled for last Wednesday was adjourned. Two days later – on Friday – Tonawanda Coke disclosed that it was closing in documents filed in federal court. The company had between 75 and 100 employees before the shutdown began.

Tonawanda Coke owes money to between 100 and 199 creditors, according to Bankruptcy Court documents. Its single biggest debt – topping $1 million – is owed to DiVal Safety Equipment of Buffalo, according to the bankruptcy filing, but a company spokeswoman said the debt is actually less than $35,000. That would make Rhino Energy, a Lexington, Ky., master limited partnership that owns coal and energy assets, as the largest individual creditor, owed nearly $294,000.

News Staff Reporter Stephen T. Watson contributed to this report.

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