HOUSTON (AP) — A company filed for bankruptcy Thursday in the wake of a massive explosion at one of its warehouses in Houston that killed two workers, injured 20 more and damaged hundreds of buildings.
Watson Grinding and Manufacturing said it filed for Chapter 11 bankruptcy in Houston federal court because of what it expects to be “a long-term interruption of business operations” due to the Jan. 24 blast.
Chapter 11 allows the metal fabricating and manufacturing company to reorganize as opposed to liquidating its assets and shutting down permanently.
“Our hearts go out to everyone who has been affected by this tragedy and we are convinced that the best way to ensure our organization can play a positive role in the long-term recovery of the area is by remaining a viable business,” John Watson, CEO of Watson Grinding and Manufacturing, said in a statement. “We are a family business and through this reorganization, we intend to save the company and protect and restore the jobs for our dedicated and hardworking team.”
The company said it had to lay off about 80 workers this week.
Mayor Sylvester Turner said he was disappointed the company filed for bankruptcy and fired employees.
“The company’s decision must not slow the pace of the recovery or the investigation. It is important that authorities determine both the cause of the blast and hold the responsible party accountable,” Turner said.
Law enforcement officials have said an electrical spark likely ignited a propylene gas leak that led to the massive explosion. A final report on the cause is expected in about two months.
Officials have said there is no evidence to indicate arson, vandalism or other criminal wrongdoing was behind the explosion.
Company employees Frank Flores and Gerardo Castorena were killed. Two other warehouse workers were injured, along with 18 people from neighboring homes and businesses.
City officials say 450 structures — mostly homes — were damaged in the explosion.
Nearly 30 lawsuits representing hundreds of home and business owners have been filed in state court against the company since the explosion, including a wrongful death suit by Flores’ family.
The bankruptcy filing will put those lawsuits on hold.
But Robert Kwok, an attorney representing 227 people whose homes, businesses and apartments were damaged by the blast, said he and other lawyers plan to file a motion in bankruptcy court asking that Watson Grinding’s insurance proceeds be released so that they will be available to pay for repairs.
Days after the explosion, John Watson had said his insurance would repair all damaged homes, but hours later he took back his statement.
“Mr. Watson started the process by saying he was going to make things right and repair these homes and now all of a sudden he’s … filed bankruptcy and is hiding behind bankruptcy protection. That’s a shame,” Kwok said.
Attorneys also plan to ask the bankruptcy court to let the lawsuits go forward against the other parties being sued, Kwok said.
Follow Juan A. Lozano on Twitter: https://twitter.com/juanlozano70