VWS Holdco: Virginia Landfill's 60-Day Collapse Under $183M Debt

VWS Holdco, Inc. and its subsidiary Shoosmith Bros., Inc. filed for chapter 11 bankruptcy protection on June 1, 2025, seeking to manage the wind-down of a Virginia municipal solid waste landfill that had operated for nearly five decades before closing in December 2022. The filing followed operational and environmental issues that left the debtors facing approximately $183 million in debt against minimal assets. Court filings state that a former employee allegedly falsified reports on landfill leachate, triggering the termination of a disposal contract with Chesterfield County. The 60-day chapter 11 case ended with the debtors moving to convert to chapter 7 liquidation and transfer venue to the Eastern District of Virginia, where the closed landfill continues to generate approximately 400,000 gallons of leachate weekly.

The Shoosmith Landfill: Five Decades of Operations

Early history and growth. The Shoosmith Landfill commenced operations in 1976 on a site in Chester, Chesterfield County, Virginia, approximately ten miles south of Richmond. Founded by the Shoosmith family—prominent landowners in the county—the facility evolved into a municipal solid waste disposal site serving the region. The landfill accepted municipal solid waste, construction and demolition debris, and industrial waste with conditional use permits for disposal from sources within Virginia and the District of Columbia.

Operational capacity. At its peak, the landfill's waste management unit boundary encompassed 506 acres, with a landfill footprint of 374 acres. The facility was permitted for disposal of an average daily volume of 2,562 tons of municipal solid waste based on 365 days per year—or 3,270 tons daily based on 286 actual operating days—with maximum daily capacity of 5,350 tons. Actual operations typically processed approximately 2,500 tons per day, five days per week.

Change in ownership. The current ownership structure dates to June 2008, when the Shoosmith Landfill was acquired by interests that would form the debtor entities. Under this structure, Shoosmith Bros., Inc.—a Virginia corporation—owns and operates the landfill, while VWS Holdco, Inc.—a Delaware corporation—serves as the parent holding company. VWS Holdco is wholly owned by non-debtor VWS Acquisitions, LLC, which in turn has three ownership constituencies: Environmental Services Management of Virginia, LLC (55.64% common units, 68.14% voting units), Volunteer Enterprises, LLC (41.36% common, 28.19% voting), and Larry McGee individually (3% common, 3.67% voting). Fred G. Nichols serves as president of the debtors, with Paul Lawrence McGee as vice president. Volunteer Enterprises—which would later serve as the proposed DIP lender—is owned 50/50 between Nichols and McGee.

Environmental infrastructure. The landfill is equipped with extensive environmental control systems required for regulatory compliance, including landfill gas collection wells and flares, leachate collection and storage systems, and groundwater monitoring installations. A February 2024 inspection by the Virginia Department of Environmental Quality classified the facility as an Elevated Temperature Landfill—a designation indicating potential subsurface thermal activity under state regulations.

Capital Structure and Prepetition Financing

The debtors entered bankruptcy with a capital structure that included secured debt held by insider-affiliated entities. The prepetition financing arrangements evolved through multiple amendments, ultimately leaving the debtors facing approximately $183 million in secured obligations.

Prepetition Notes.

The primary prepetition indebtedness arose under an Amended and Restated Securities Purchase Agreement dated April 30, 2020, pursuant to which VWS Holdco issued Senior Notes and Junior Notes in original principal amounts of $35.8 million and $64.9 million, respectively. These obligations were secured by first-priority liens (Senior Notes) and second-priority liens (Junior Notes) on substantially all of the debtors' assets.

Insider consolidation of debt. Through a Non-Recourse Securities Assignment Agreement effective January 27, 2023, Volunteer Enterprises, LLC acquired all right, title, and interest in the Notes and became the Notes Collateral Agent. Given that Volunteer is owned equally by the debtors' president and vice president, this transaction consolidated the secured debt in the hands of company insiders, and Volunteer later proposed to serve as the DIP lender in the bankruptcy case.

Bridge financing for bankruptcy. On May 27, 2025—just days before the petition date—the parties executed a third amendment to the Securities Purchase Agreement creating a new class of Bridge Notes to fund bankruptcy preparation and the initial chapter 11 case. The $500,000 Bridge Notes facility was secured by liens ranking pari passu with the Senior Notes, with the understanding that the debtors would seek court approval to "roll up" the Bridge Notes obligations into the DIP facility.

Surety Bonds and Cash Collateral.

The Virginia Department of Environmental Quality required the debtors to maintain substantial financial assurance for closure and post-closure obligations:

Evergreen National Indemnity Company issued both surety bonds on behalf of the debtors. To secure the debtors' obligations under the bonds, Evergreen holds approximately $14.7 million in cash collateral—representing a portion of the debtors' remaining liquid assets.

Events Leading to Bankruptcy

The bankruptcy followed a series of operational and regulatory issues described in court filings.

2016-2018: Denied Expansion Limits Capacity.

The landfill site included an adjacent rock quarry operated by Vulcan Materials that was scheduled for conversion to approximately 30 million tons of additional airspace for municipal solid waste disposal. In February 2016, the Virginia DEQ issued a permit authorizing this use. However, Chesterfield County—the host jurisdiction—challenged the permit and ultimately succeeded in blocking the expansion.

In July 2018, the Chesterfield County Board of Supervisors denied the land-use application necessary for the quarry conversion. Subsequent litigation against the county proved unsuccessful. The denial forced the company to write off approximately 17 million tons of planned future capacity. Without the ability to expand, the landfill's remaining capacity was limited.

This was not the first legal battle between the landfill operator and Chesterfield County. A 2004 Virginia Supreme Court case documented earlier disputes, reflecting what court filings describe as a long-running relationship between the landfill operator and host community.

December 2022: Closure and Revenue Collapse.

With expansion blocked and remaining capacity exhausted, the Shoosmith Landfill ceased accepting waste on December 30, 2022. The closure immediately eliminated the debtors' primary revenue stream while leaving ongoing environmental obligations intact.

Workforce reduction. The closure forced the debtors to downsize staff while bringing in consultants to assist with regulatory compliance during the closure process. Closure activities—managed by related entity Shoosmith Construction—include placing intermediate and final cover on the landfill, repairing erosion damage, cleaning sediment basins, replacing storm piping, and installing slope down drains per permit requirements.

Capacity reduction. Certain property transfers in 2024 further reduced the landfill footprint from 506 acres to 335 acres, with the waste management unit boundary shrinking from 374 acres to 261 acres. This reduced permitted design capacity from 75.89 million cubic yards to 42.1 million cubic yards.

April 2020-2024: The Swift Creek Renewables Contract.

The Shoosmith Landfill, like most municipal solid waste facilities, produces methane gas as organic material decomposes. Federal regulations require landfills to capture or flare fugitive gases to prevent atmospheric release. In April 2020, Shoosmith Bros. entered into a contract with Morrow Energy through its subsidiary Swift Creek Renewables, LLC ("SCR") to capture methane from the landfill, treat it accordingly, and sell the gas through natural gas pipeline networks. The gas qualifies for special treatment under federal policy due to its cellulosic renewable energy value.

Gas rights acquisition. To enable SCR's operations, Shoosmith purchased gas rights from Ingenco (now owned by Archaea Energy, a BP company) for $6.75 million, structured as sixty-four monthly payments of $126,682.20 beginning forty-five days after the first gas transfer. The transfer occurred on September 13, 2023, with the first payment due August 15, 2023.

Royalty projections versus reality. The SCR transaction entitled Shoosmith to a 25% royalty on gas production, with projections suggesting royalties exceeding $1.0 million per month at estimated production levels. However, a contractual provision required a 50% reduction in royalties until SCR recovered certain "Reimbursable Costs" estimated not to exceed $8.0 million. Actual results differed from projections:

The increase in reimbursable costs meant that royalties remained reduced far longer than anticipated, reducing expected post-closure revenue.

VDEQ violation notice. On June 20, 2024, Shoosmith received a letter from the Virginia DEQ asserting violations of Air Pollution Control Law and Regulations. The cited violations included high-temperature wells, destruction of the synthetic closing cap's integrity, and leachate generation exceeding all engineering estimates. Shoosmith contends that SCR caused these violations through the manner in which it drilled the landfill liner during methane capture operations—allegations that remain disputed.

July 2024: The Leachate Contract Termination.

The termination of the debtors' leachate disposal arrangement with Chesterfield County became a central issue.

Leachate basics. Effluent leachate is the contaminated liquid generated when precipitation percolates through decomposing waste in landfills. Environmental regulations require continuous removal and treatment of this byproduct. For the Shoosmith Landfill—now classified as an Elevated Temperature Landfill with documented integrity issues—leachate generation has been higher than historical estimates predicted.

The county contract. Until July 3, 2024, Shoosmith held a contract with Chesterfield County to accept effluent leachate for treatment at the county's Publicly Owned Treatment Works at a rate of $0.02 per gallon. This arrangement had kept monthly treatment costs in the range of $30,000 to $50,000.

Falsified reports. According to court filings, a former employee—unbeknownst to the debtors—allegedly falsified the quantity and chemical analysis of the effluent leachate being delivered to the county treatment facility. The falsified reports triggered a suspension and subsequent termination of the county contract.

Cost increase. Forced to seek private treatment providers, the debtors now pay $0.15 per gallon for treatment plus $0.07 per gallon for transportation—a total of $0.22 per gallon versus the prior $0.02 rate. Court filings characterize this as an "eleven-time cost increase" that proved "unsustainable for the Debtors' business operations considering that they now have relatively no income."

As county documents note, "Shoosmith Bros., Inc. has not updated financial assurance cost estimate for continuous pumping, hauling, and disposal of leachate"—a 2017 estimate that accounted for approximately $18,950 per year versus actual costs now approaching $600,000 annually.

The 60-Day Chapter 11 Case

Filing and First Day Relief.

VWS Holdco, Inc. and Shoosmith Bros., Inc. filed voluntary chapter 11 petitions on June 1, 2025, in the U.S. Bankruptcy Court for the District of Delaware. Steven F. Agran of Carl Marks Advisory Group LLC—retained as Chief Restructuring Officer just three days earlier on May 29, 2025—submitted the First Day Declaration outlining the debtors' circumstances and objectives.

Stated goals. The debtors articulated two primary purposes for the bankruptcy filing: (1) addressing issues posed by the Swift Creek Renewables contract and environmental/leachate removal considerations, and (2) initiating a sale process to maximize asset value while providing for continued operation and closure of the landfill through a new owner.

First day motions. The debtors sought standard first day relief including joint administration, cash management continuation, employee wage authorization, insurance and surety bond maintenance, utility service protection, and critical vendor payment authority.

DIP Financing: Never Finalized.

The debtors' DIP financing arrangements involved an insider lender:

The proposed DIP lender—Volunteer Enterprises, LLC—was the same insider entity that held the prepetition Senior and Junior Notes through the 2023 assignment. The DIP facility contemplated rolling up the $500,000 Bridge Notes and providing postpetition secured financing with superpriority administrative expense status.

Chesterfield County and the Virginia DEQ filed a joint objection to the Final DIP Order on July 24, 2025—the same day the debtors moved to convert the case—raising concerns about the environmental implications of the financing structure.

Sale Process Interrupted.

The debtors retained Teneo Securities LLC as investment banker to conduct a sale process for substantially all assets. However, the sale process was interrupted by the rapid conversion to chapter 7 before any transaction could be consummated.

Committee Formation.

An Official Committee of Unsecured Creditors was appointed in the case and retained Greenberg Traurig, LLP as counsel. The committee's involvement was brief—its counsel's retention was approved on July 30, 2025, just one day before conversion. On the day of conversion, the committee filed an omnibus objection to professional fees.

Conversion and Venue Transfer

Debtors Move to Convert.

Just 53 days after filing, the debtors themselves moved to convert the case to chapter 7 liquidation:

The debtors filed the motion to convert rather than a motion by creditors or the U.S. Trustee.

Environmental Stakeholder Coalition.

Multiple parties with environmental and financial interests joined in seeking venue transfer to Virginia:

• Chesterfield County, Virginia
• Virginia Department of Environmental Quality
• Evergreen National Indemnity Company (surety bond issuer)
• Swift Creek Renewables, LLC

The coalition's filings supported the venue transfer to a court with geographic proximity to the facility.

Transfer to Eastern District of Virginia.

The venue transfer from Delaware to the Eastern District of Virginia—entered contemporaneously with the conversion order—placed the chapter 7 case in the federal district encompassing Chesterfield County, where the landfill is located and where ongoing environmental compliance issues will require attention from local authorities.

Professional Retentions

The debtors retained the following professionals:

Debtor Professionals.

Committee Professionals.

Environmental Liabilities in Landfill Bankruptcies

The VWS Holdco case highlights challenges that can arise when landfills with substantial post-closure obligations seek bankruptcy protection.

CERCLA framework. Under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA), persons responsible for creating environmental hazards bear liability for remediation costs. The costs of cleaning up contaminated sites can be high—often beyond the financial means of responsible parties—which can lead polluters to file bankruptcy. However, bankruptcy provides limited relief: while in chapter 11, a debtor in possession must continue to comply with all environmental rules, including air emissions permits, water discharge permits, and hazardous waste management requirements.

The 30-year tail. Post-closure expenses are difficult to predict beyond the standard 30-year monitoring period. A 2021 University of Colorado study documented over 3,000 active landfills and 10,000 closed facilities in the United States, representing substantial aggregate environmental and financial liabilities. Closure costs depend on landfill size, design, and waste composition, with hazardous waste requiring costlier procedures. Post-closure monitoring obligations may continue for 30 or more years after closure—meaning a landfill closed in 2022 may generate compliance obligations through 2052 and beyond.

Shoosmith's specific challenges. The Shoosmith Landfill's designation as an Elevated Temperature Landfill, the documented integrity failures in the synthetic cap, and the approximately 400,000 gallons of weekly leachate generation create ongoing environmental obligations. The approximately $19.3 million in surety bonds—backed by $14.7 million in cash collateral held by Evergreen—provides financial assurance for closure and post-closure obligations.

Industry Context: Waste Sector Dynamics

The VWS Holdco bankruptcy occurs amid consolidation in the waste management industry and rising operational and environmental compliance costs.

Market scale. The U.S. waste and recycling industry was valued at $91 billion in 2022, with ongoing capacity consolidation as larger operators acquire smaller facilities. The industry saw 178 merger and acquisition transactions across the U.S. and Canada in 2025, including the $8 billion acquisition of a majority stake in GFL Environmental's environmental services business by affiliates of Apollo and BC Partners.

Regulatory pressures. Emissions regulations continue tightening, with stricter methane requirements and California's updated Landfill Methane Regulation requiring elevated temperature response within 120 days. These requirements increase compliance costs for operators.

Sale process status. The sale process did not close before the conversion to chapter 7. A closed facility does not generate tipping fee revenue, while environmental obligations continue.

Frequently Asked Questions

When did VWS Holdco file for bankruptcy? VWS Holdco, Inc. and Shoosmith Bros., Inc. filed for chapter 11 bankruptcy protection on June 1, 2025, in the U.S. Bankruptcy Court for the District of Delaware.

What is the Shoosmith Landfill? The Shoosmith Landfill is a municipal solid waste facility located in Chester, Chesterfield County, Virginia, approximately ten miles south of Richmond. It operated from 1976 until its closure on December 30, 2022.

What caused VWS Holdco's bankruptcy? The bankruptcy followed multiple factors: the 2018 denial of expansion permits that eliminated future capacity; closure in December 2022 that ended revenue; the gas royalty arrangement with Swift Creek Renewables producing lower-than-projected income; a June 2024 environmental violation notice; and the termination of a leachate disposal contract with Chesterfield County after a former employee allegedly falsified testing reports.

How much leachate does the landfill generate? The Shoosmith Landfill generates approximately 400,000 gallons of leachate per week—over 20 million gallons annually—which must be continuously pumped, hauled, and treated at an offsite location.

Why did leachate costs increase so much? Prior to July 2024, the debtors paid Chesterfield County $0.02 per gallon for leachate treatment. After termination of the county contract due to falsified reports, private treatment providers charged $0.22 per gallon (including transportation)—an eleven-fold increase that the debtors characterized as unsustainable given their lack of revenue.

Why was the case converted to chapter 7? The debtors themselves moved to convert the case on July 24, 2025, just 53 days after filing. The conversion followed interim DIP approval and occurred before a sale process was completed.

Why was venue transferred to Virginia? The venue was transferred to the Eastern District of Virginia to address environmental compliance issues closer to the debtor's operations in Chesterfield County. Multiple stakeholders—including the county, Virginia DEQ, and the surety bond issuer—supported the transfer.

What happened to the sale process? The sale process was interrupted and never completed due to the rapid conversion to chapter 7.

How much debt did the debtors have? The debtors entered bankruptcy with approximately $183 million in prepetition secured debt, consisting of $24.7 million in Senior Notes, $158.4 million in Junior Notes, and $500,000 in Bridge Notes—all held by insider-affiliated entities.

What environmental violations existed? A February 2024 DEQ inspection cited three active leachate seeps and excess blown litter. A June 2024 violation notice addressed high-temperature wells, destruction of the synthetic closing cap's integrity, and leachate generation exceeding engineering estimates. The facility is classified as an Elevated Temperature Landfill.

Who is the claims agent for VWS Holdco?

Verita Global (Kurtzman Carson Consultants) serves as the claims and noticing agent. The firm maintains the official claims register and distributes case notifications to creditors and parties in interest.

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