Boyce Hydro, the owner of the dams in Mid-Michigan that failed in May, has filed for bankruptcy.
Court records show the company filed for bankruptcy on Friday, July 31.
The company operated the Edenville, Sanford, Secord, and Smallwood dams along the Tittabawassee River in Midland and Gladwin counties.
"They put profits over people and safety," said Ven Johnson, attorney with Ven Johnson Law.
Boyce Hydro has just more than $1 million in liquidated unsecured debts that are known of, some of which is disputed, according to the lawsuit.
"They're not a surprise. We anticipated this from the very beginning and we're obviously going to contest this in court, in bankruptcy court, and in state and federal courts," Johnson said.
Businesses and families affected by flooding have filed numerous class action and individual lawsuits.
Johnson is representing more than 100 residents and business owners. He called the move reckless.
"The owners of the dam were told this will happen, it's just a matter of time if you don't fix it. They didn't fix it and the federal government said you can't sell this anymore," Johnson said.
Inside court records, it states that Boyce Hydro does not believe it in any way caused the flooding and tried to take steps to prevent it.
In 2006, the company acquired the dams and began making improvements, according to court records.
Through April 20, the company spent $6 million on improvements to the dams, much of which was for improvements required by the Federal Energy Regulatory Commission (FERC).
Documents say much of that money was borrowed by Boyce Hydro due to the limited revenue of the dams.
One requirement was for the Edenville dam for more spillway capacity, which was estimated to cost more than $8 million.
In 2013, the company offered to surrender their FERC license for the Edenville Dam and lower the level of the Wixom Reservoir approximately 7 feet below the prior “normal pond” level to increase dam safety, court records say.
Local communities and government agencies greatly opposed this. The company looked to address these concerns by finding a buyer that could afford to add the additional spillway capacity, but could never find one.
In Sept. 2018, FERC revoked Edenville Dam's license to generate electricity, and could no longer generate any revenue.
Annual revenue from the Edenville Dam operation had averaged approximately $1.3 million during the three previous years.
After the license revocation, the Edenville Dam became the regulatory control of the Dam Safety Unit of Michigan’s department of the Environment, Great Lakes and Energy (EGLE).
Attorney General Dana Nessel issued the following statement:
“This is a clear example of the problem that can arise when private entities own public infrastructure. Boyce Hydro has been a negligent owner and manager for years, and now, rather than dealing with the tragic circumstances that resulted from its negligence and paying the cost to fix those problems, the company is declaring bankruptcy and potentially leaving Michigan taxpayers holding the bag. Boyce Hydro has failed to properly maintain its infrastructure, it has failed to abide by federal and state environmental requirements, it has failed to address the concerns of state and federal regulators in the aftermath of the dam failures, and it has failed to be a good partner to this community. My office will do everything it can to make sure Boyce and the related entities and individuals responsible for this disaster are held accountable to the people of Michigan.”
"Worst case scenario would be that the bankruptcy judge says 'OK, for all the folks in this Midland crisis situation, you can go after the insurance money from the insurance policies only. And the rest, you can't go after the owners of the dam,'" Johnson said.
The best case scenario would be the judge deeming the company's file for bankruptcy as fraudulent. Johnson said he will be fighting and doing everything he can for Mid-Michigan residents.
"We're going to chase these guys down. They're not getting off this easy," Johnson said.
TV5 has reached out to Boyce Hydro and we are waiting on a response.