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Spill cleanup costs, reputation damage push D&L into bankruptcy
YOUNGSTOWN
Ben Lupo’s D&L Energy Inc. has filed for Chapter 11 bankruptcy protection, citing the high cost of cleanup of the Jan. 31 oilfield waste discharge Lupo purportedly ordered and the decreased business stemming from the post-spill reputation damage.
Lupo, 62, of Poland, has pleaded innocent to a federal criminal charge of violating the Clean Water Act in connection with the spill of brine and oil-based drilling mud into a storm drain flowing into a Mahoning River tributary near D&L’s Salt Springs Road headquarters in Youngstown.
An environmental service company, Sunpro Inc., of North Canton, has sued D&L in Mahoning County Common Pleas Court for $1 million in unpaid cleanup costs from that spill.
The D&L reorganization bankruptcy filing was Tuesday in U.S. Bankruptcy Court in Youngstown, where Judge Kay Woods will conduct a 9:30 a.m. Friday hearing on the matter.
“They were facing an onslaught of lawsuits. ... It does not surprise me,” Atty. Dave Betras said of the D&L bankruptcy filing. A bankruptcy filing stays all civil legal proceedings until the bankruptcy issue is resolved, explained Betras, whose practice includes some bankruptcy-court work. However, criminal matters are not stayed by a bankruptcy filing, he added.
If a federal-court order conflicts with any lower- court order, the federal order prevails, Betras said. “Federal court trumps state court,” said Betras, whose office is in Canfield.
“As a result of Lupo’s alleged actions, the debtors were forced to incur substantial cleanup costs in order to comply with federal and state authorities and various environmental regulations,” the bankruptcy filing says.
“In addition to the substantial monetary liabilities associated with the cleanup process, the debtors’ general business reputations have suffered greatly as well and have resulted in decreased business operations and revenues,” the filing explains.
These factors have put D&L in a position where it “cannot continue to operate without the protections of the bankruptcy court,” D&L’s lawyers wrote.
On Feb. 6, the Ohio Department of Natural Resources ordered D&L to cease all injection-well operations statewide and storage operations at the company’s headquarters.
Founded in 1986, D&L has 18 employees, 580 operating oil and gas wells in Northeast Ohio and northwest Pennsylvania and 21,000 acres under oil- and gas-drilling leases.
In the bankruptcy filing, D&L is asking Judge Woods to bar utilities from disconnecting service to D&L and to allow it to meet payroll and employee-benefit costs.
Since the illegal-dumping allegation surfaced, D&L said it has taken cost-cutting measures, including a staff reduction, to remain competitive and tried to sell the company’s interest in some saltwater-injection disposal wells.
However, Sunpro sought and received last month a temporary restraining order from Judge John M. Durkin of common pleas court barring D&L from selling or disposing of a North Lima disposal well or any other assets.