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Local attorney Brent Coon gives the public an update on TPC Group's recent filing for Chapter 11 bankruptcy. Photo taken June 1, 2022. Photo by Courtney Pedersen/ The Enterprise.

Aerial photos taken durng the ongoing fire following last week's explosion at the TPC Group chemical plant in Port Neches were on display during a press conference with members of the U. S. Chemical Safety Board Thursday in Beaumont. Photo taken Thursday, December 5, 2019 Kim Brent/The Enterprise

Plaintiffs in a lawsuit against TPC Group have encountered another curveball -- a bankruptcy filing from the company that a local attorney says could threaten their ability to receive restitution after an explosion at the Port Neches.

The 2019 explosion prompted the evacuation of more than 50,000 area residents during the Thanksgiving holiday, many returning to damaged homes some two days later.

The fire caused by the explosions burned for a month afterward.

RELATED: Strained TPC Group enters forbearance agreement

The company on Wednesday morning filed for Chapter 11 bankruptcy. But a statement from the Houston-based company said it already has entered a financial agreement that will, in part, allow the company to resolve claims arising from the explosion.

“We have undertaken many efforts to address the impacts of these events and preserve liquidity, which has given us the necessary time to consider the best path forward for our business and our stakeholders," Chairman, President and Chief Executive Officer of TPC Group, Edward J. Dineen said in a statement. "We are confident that through this process, we will bolster our liquidity, substantially improve our debt position, and definitively resolve the liabilities associated with the Port Neches facility incident.”

But Beaumont attorney Brent Coon, whose firm Brent Coon & Associates is representing many of the claimants, said it doesn't appear there's enough money in TPC's assets to pay off the claimants and pay interest to bondholders.

RELATED: TPC starts terminal operations at Port Neches site

And he thinks that's been the company's plan from the start.

"We found out in our litigation over the last two years that they had a very limited amount of insurance coverage, I believe a $100 million policy," he said at a press conference Wednesday. "They went through it pretty quickly and that led them to pay future claims out of profits they made at the facility itself -- paying those out of net revenue."

Coon said the company after the incident indicated it would look to use monies received from insurance policies for future claims as well as paying out from future revenue streams.

However, more than two years after the incident, the company and those affected by the explosions are still in litigation. Now that TPC has filed for bankruptcy, that plan can't move forward, Coon said.

RELATED: Investigators zero in on cause of TPC blast

Coon said documents obtained from the company revealed it has operated largely at a deficit. 

"Their plant was losing money when most facilities were making money," he said. "There were a bunch of different reasons you could blame on that."

Dineen's statement lists the COVID-19 pandemic, supply chain issues, commodity price increases, higher energy costs, Winter Storm Uri-caused operational challenges and the Port Neches explosion as cause for the company's financial strain.

Coon also noted "a lot" of inefficiencies in the company's older plants that had not been renovated and subsequently broke down more often, causing interruptions to business and ultimately financial trouble and $1 billion in debt owned by bondholders.

RELATED: EXCLUSIVE: Communications after TPC Group blast give more information about asbestos discovery, official response

Over the past two years, Coon said his firm discovered that TPC received insurance money intended to rebuild the plant, but that's not how it was used.

Instead, it invested some of the money to improve the Houston facility and "hopefully" produce more profit.

"They also spent a significant portion paying the bondholders back some of the monies they owed," Coon said. "What occurred here, because they had been losing money all along, (was that) nobody wanted to invest in them. The bondholders were already upside down, they felt that the billion dollars they loaned them, they would never see back and that the plant that was left was worth less than half of what they had loaned them out in the first place."

Now bondholders are positioned to close on TPC, and if the plant is sold, the bondholders are first in line to receive money from the sale.

RELATED: Layoffs to hit blast-damaged TPC Group plant

Everyone else -- people that were hurt working in the plant, living in the neighborhood where debris fell, that lost their properties or whose properties were severely damaged -- doesn't have a legal claim to anything until they've received a judgment in their case, Coon said. 

All cases filed, at least those with Coon's firm, against the company have yet to be litigated to reach such a judgement.

"That leaves over 5,000 individuals in our Mid-County area, primarily those that live near the TPC plant, it leaves them holding the bag," Coon said. 

But Coon is optimistic that some money for claimants will come out of bankruptcy proceedings.

RELATED: Butadiene releases from TPC haven't stopped

The first round of bankruptcy hearings, for which Coon's firm has retained counsel, is Thursday morning.

"We (also) solicited a consulting firm in New York that specializes in negotiating these kinds of hostile takeovers of companies or failing business operations where you can negotiate with the bondholders some recourse at the bankruptcy proceeding or even outside the bankruptcy proceeding," Coon said.

TPC has filed thousands of pages of documents, requesting to take a portion of immediate future earnings for operations and other costs, but Coon said he hasn't seen any mention of money set aside for claimants.

The bankruptcy will stay already-delayed litigation from local claimants impacted by the explosion, Coon said. The case previously was delayed as TPC requested to consolidate the cases in another county and a judicial panel decided where to move the case.

RELATED: Lawyers expect TPC Group case resolution still years off

It ultimately ended up in Orange County under Judge Courtney Arkeen.

Moving forward, claimants should be aware of two things, Coon said.

If money is set aside after the company undergoes bankruptcy, there will a process in which an individual would need to provide a proof of claim form.

That process could be months or years down the road, Coon said.

Additionally, Coon said he anticipates in the near future to ask the court to separate the other parties, including individual investor groups; an engineering group; and an international chemical company, from TPC so some litigation can continue.

"TPC hasn't been good to our community," he said. "They haven't stood by our community. They abandoned our community."

Olivia Malick is the education reporter for The Beaumont Enterprise.