Owners of failed Midland-area dams file for bankruptcy

Twin companies that own and operate failed Midland-area dams that caused widespread flood damage have filed for bankruptcy amid attempts by residents to recoup hundreds of millions of dollars.

Boyce Hydro LLC and Boyce Hydro Power LLC filed Chapter 11 bankruptcy on Friday in federal bankruptcy court in the Eastern District of Michigan.

The move came more than two months after historic rains between May 17 and May 19 led to widespread flooding in Midland and Gladwin counties. 

Boyce Hydro listed more than $7.1 million in liabilities owed to its 20 largest creditors.

Both limited liability corporations owe more than $6.1 million to Chicago-based Byline Bank for a federal loan, according to court filings.

Boyce Hydro also listed a $418,153 owed to Midland-based Gerace Construction and more than $152,000 to New York-based Gomez & Sullivan Engineers.

Toward the end of the storm, on May 19, the Edenville Dam bordering Gladwin and Midland counties broke, sending a surge of water down the Tittabawassee River and over the top of the Sanford Dam downstream.

Gov. Gretchen Whitmer requested a federal disaster declaration from President Donald Trump and estimated the flooding caused approximately $245 million in damages across five counties. 

Attorney Geoffrey Fieger filed two proposed class-action lawsuits in May seeking $500 million for Midland-area flood victims, claiming the owner of the dams and the State of Michigan were negligent in maintaining them.

“Boyce Hydro’s bankruptcy filing shows once again the company’s disregard for the residents of mid-Michigan," Nick Assendelft, spokesman for the Michigan Department of Environment, Great Lakes, and Energy, wrote in a statement. "For years, it ignored pleas by the Federal Energy Regulatory Commission to make sure its dams met strict safety standards. Now, it’s ignoring pleas from area residents to take responsibility for the company’s two collapsed dams."

The state department will continue investigating the dams' failures, Assendelft said.

"The team will examine the contributing factors that led to the failures of the Edenville and Sanford dams in mid-May," Assendelft wrote. "The team’s recommendations will inform next steps in the dams’ futures."

A bankruptcy case filing indicates several contractors that helped stabilize the dams after the flooding have not been paid. The contractors have filed liens against the properties but Boyce Hydro co-manager Lee Mueller believes the debts will be classified as unsecured.

“I am personally devastated and am in despair for all property owners who have been impacted — many of whom I know personally,” Mueller wrote in the declaration filed in bankruptcy court. “I am frustrated by years of unwillingness by homeowners to contribute to improvements that could have improved the dam for everyone, and with the regulatory decisions that directly caused this catastrophe.”

The Edenville and Sanford dams most likely will be condemned, Mueller wrote.

Otherwise, the debtors would consider liquidating valuable equipment in the dam houses.

Before filing bankruptcy, the debtors reached agreement on a settlement with liability insurers that provides more than $3 million to the bankruptcy estates, Mueller wrote. 

rsnell@detroitnews.com

Twitter: @robertsnellnews