Company Files For Bankruptcy Following Discovery Of Regulatory Violations

    Regulatory / Banking ExpertThis case involves a chemical plant in South Dakota that was shut down for various breaches of environmental regulatory codes. It was discovered that over the course of a year, the chemical plant repeatedly violated air quality standards by improperly storing chemical substances, contaminated various drainage channels with toxins, and spilled approximately 500 lbs. of chemicals into nearby rivers. After the plant received an order requiring it to suspend operations, news that the plant had failed to protect against spills of hazardous waste went public. Within hours, the company’s shares dropped 35%. The plant filed for bankruptcy shortly thereafter. An expert in corporate banking was sought to review the case and determine whether or not bankruptcy was a foreseeable outcome given the status of the company’s financials.

    Question(s) For Expert Witness

    • 1. Please describe your experience evaluating corporate financials and/or assessing bankruptcy risk.
    • 2. Have you dealt with environmental regulations in your career, and can you opine on the risk they present to a chemical plant?

    Expert Witness Response E-031332

    I have a great deal of experience evaluating corporate financials and assessing bankruptcy risk. Credentialed as both an attorney and a CPA, I have lectured on issues of solvency and business forecasting at well-known business and law schools. In my career, I have dealt with contingent liability issues whose financial impact can be assessed in much the same way. I have analyzed financial reporting in prominent cases, including a case that involved upwards of $20 billion from investment banks for mortgage-backed securities fraud. With significant experience consulting on cases like these, I am more than happy to review the chemical plant’s financials.

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