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Honeywell: We never promised Tonawanda Coke $2 million loan

Lawyers for one of Tonawanda Coke's crucial lenders, Honeywell International, say the corporation never promised to lend the convicted polluter the $2 million needed for its final court-ordered community service payment.

Beginning in April 2017, Honeywell provided three loans – mortgage notes – totaling some $8 million. But Honeywell was unwilling to provide a fourth loan that would have allowed Tonawanda Coke to pay off the last of its penalties.

"Each of these loans was agreed to separately, and there was no agreement at the time of any of the loans that Honeywell would extend any further loans," the lawyers said in papers recently filed in Tonawanda Coke's bankruptcy case.

Through its own lawyers, Tonawanda Coke asked the judge in its criminal case to grant it some relief on the final $2 million payment because, after Honeywell backed out, it could find no other lender. While the judge granted no leniency, the final installment of the $12 million being spent on studies about the extent of the pollution remains unpaid.

Tonawanda Coke used the most recent loan, $2.52 million in April of this year, to pay the last installment of a separate $12.5 million fine. The fine was levied when the company was sentenced for environment crimes in 2014.

Tonawanda Coke. (Derek Gee/News file photo)

Jackie James-Creedon is executive director of Citizen Science Community Resources, one of the groups that helped build a case against Tonawanda Coke for the pollution that rained from its now-idle factory. She said it seems plausible that Honeywell never promised a fourth loan.

"I'm inclined to believe Honeywell," she said.

As collateral for the mortgages, Tonawanda Coke put up its land on River Road. But the site is potentially contaminated, according to the state Department of Environmental Conservation, which has promised to investigate to determine the extent of contamination and what to do about cleaning up the acreage. A Honeywell spokeswoman refused to comment when asked if Honeywell would try to take the property.

Honeywell operated the coke factory until late 1977 and sold it "as is" to Tonawanda Coke in 1978 for $2 million, according to court papers. Then in August 2015, Tonawanda Coke sued Honeywell, alleging it had failed to meet state and federal mandates for environmental assessments and remediation. The parties settled the lawsuit in 2016 with a confidential consent agreement.

Flash forward to 2017. Honeywell International, which still has a corporate presence in Buffalo, loaned Tonawanda Coke $2.52 million in April of that year. The money helped Tonawanda Coke pay its criminal fine, Honeywell spokeswoman Victoria Streitfeld said.

Another $3.03 million loaned in October 2017 went for a court-mandated community service payment, Streitfeld said. Honeywell's final $2.52 million, loaned in April, went to the criminal fine – the final installment, court papers indicate.

Both companies acknowledge discussing a fourth loan this year. And both companies acknowledge that the state and federal enforcement actions cooled Honeywell's willingness.

Honeywell doesn't say in its court papers when it backed out. Tonawanda Coke says it received word on Oct. 3, and the payment was due five days later.

Looming was a hearing that the state Department of Environmental Conservation planned to convene on Oct. 10 to revoke Tonawanda Coke's air emission permits.

The hearing ended abruptly. Then on Oct. 12, the public learned Tonawanda Coke intended to close the factory. The company filed for Chapter 11 bankruptcy days later, Oct. 15.

Honeywell International revealed its loans to Tonawanda Coke in a motion to unseal the confidential settlement agreement from 2016, the pact that settled the lawsuit filed in 2015. The judge in the bankruptcy case was curious about the agreement during the first court hearing held in the matter. Honeywell said Tonawanda Coke does not object to unsealing the document.

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