Judge rips firm in plant explosion

A veteran bankruptcy judge issued a seven-minute tirade Monday against the firm involved in the northwest Houston fatal explosion last month, implying company officials were selfishly prioritizing their own financial woes over the devastating losses in the community.

U.S. Bankruptcy Judge Marvin Isgur began by telling a courtroom packed with lawyers for explosion victims that he’d “rarely been angrier” than he was upon seeing the motion filed by attorneys for Watson Grinding & Manufacturing and Watson Valve, which asked that Watson be allowed to swiftly pay off the company’s bank loan in a discounted $3 million lump sum with insurance money. The implication of the company’s emergency motion, according to the judge, was that Watson executives were putting their own needs ahead of residents harmed in the blast as well as two workers and a local resident who died as a result of the early morning explosion.

The judge spoke in measured tones, but his outrage was apparent to several lawyers who’d spent time in his court.

“Our community suffered a major tragedy on Jan. 24, 2020. Hundreds of people’s lives have been changed forever by the catastrophe on that day,” Isgur said. “Today is not the day in which ultimate blame will be placed.”

‘Vigilant’ focus on victims

The judge said his “vigilant” focus would be on people facing life-changing upheaval from the blast: “The families who have lost a loved one, who are caring for an injured child, who have lost their homes or had damage to their homes are facing true emergencies.”

Isgur said seeking to pay back the bank through an emergency motion amounted to a fundamental violation of victims’ due process rights. The bank loan was not an emergency, he said.

Isgur then denied the motion.

“It will not happen on my watch,” he told the court.

After a recess to address unrelated procedural concerns, Jarrod Martin, a lawyer for both Watson entities, told the judge the harm caused by the explosion was “absolutely heartbreaking.” Martin said Watson “takes the concerns you raised very seriously.”

The judge set up a committee to represent a broad array of creditors who may have suffered harm in the blast. This group will likely include the families of three men killed as a result of the explosion, injured victims, residents and business owners whose property was damaged as well as insurance companies. The judge also addressed safety issues, requests for inspection of the blast site and the preservation of evidence. He set the next hearing in the case for 3 p.m. Friday.

‘Appalling’ motion

Last week Watson officials filed for bankruptcy and announced the same day that they had dismissed 80 employees.

Initial hearings are often routine, but this case took an odd turn with the companies’ emergency motion to compromise with Texas Capital Bank, according to Sidney Scheinberg, a Dallas bankruptcy lawyer unaffiliated with the case who reviewed Watson’s filings at the request of the Houston Chronicle.

Scheinberg said he wasn’t surprised that Isgur had the same reaction to what he saw as a potentially “self-serving motion” by Watson officials to protect their own needs.

“To do that on the first day is kind of appalling especially in front of Judge Isgur, who is going to read every document,” Scheinberg said. “There may be some judges out here where they would get away with that, but the stupidity on their part that they thought they could get this through with him is astounding.”

Scheinberg said the motion was not unethical or wrong, it was just a question of bad timing and having a bit of a tin ear.

“It looked like they were trying to help themselves and not anybody else,” he said.

Kelli Norfleet, a bankruptcy lawyer at Haynes and Boone LLP, who is not connected to the Watson case and did not attend the hearing, said attorneys in the building continued to discuss Isgur’s speech in the hours afterward.

She said it was unusual for lawyers to try to pay off secured creditors on their first day before a judge. She said the lawyers in the Watson case are familiar with Isgur and his outlook on bankruptcies, so they probably didn’t go into the motion blindly.

“They’re just trying to do the best for their clients in a bad situation,” she said. “This seems like a particularly difficult situation.” gabrielle.banks@chron.com