VWS Holdco Converts to Chapter 7 After $183M Insider Debt
VWS Holdco Converts to Chapter 7 After $183M Insider Debt and Failed Landfill Sale
ElevenFlo Research
January 2, 202613 min readUpdated September 8, 2026
VWS Holdco, Inc. and its subsidiary Shoosmith Bros., Inc. ran a chapter 11 case for just 60 days before obtaining conversion to chapter 7 liquidation and transferring venue from Delaware to the Eastern District of Virginia, abandoning a DIP-backed sale of a closed Virginia municipal solid waste landfill. The debtors filed their petitions on June 1, 2025 in the U.S. Bankruptcy Court for the District of Delaware (No. 25-10979, jointly administered), reporting roughly $183 million of insider-held note debt against minimal assets after the Shoosmith Landfill stopped accepting waste in December 2022. Court filings state that a former employee allegedly falsified reports on landfill leachate, triggering termination of a disposal contract with Chesterfield County and an eleven-fold jump in treatment costs for a facility that still generates about 400,000 gallons of leachate weekly.
VWS Holdco, Inc. (2 jointly administered entities)
Court
U.S. Bankruptcy Court, District of Delaware (transferred to E.D. Virginia)
Case Number
25-10979 (jointly administered)
Judge
Hon. J. Kate Stickles
Petition Date
June 1, 2025
Conversion to chapter 7
July 31, 2025
Venue Transfer
July 31, 2025 (to E.D. Virginia)
Total Prepetition Debt
~$183 million (insider-held notes)
Scheduled Assets / Liabilities
$0–$50,000 / $100–$500 million
DIP Facility
Up to $5.4 million (Volunteer Enterprises); interim only, never finalized
Surety Bonds
~$19.3 million closure/post-closure (Evergreen)
Case Snapshot
Shoosmith Landfill and Insider Ownership Structure
The Shoosmith Landfill operated from 1976 until it stopped accepting waste in December 2022, on a site in Chester, Chesterfield County, Virginia, about ten miles south of Richmond. It accepted municipal solid waste, construction and demolition debris, and industrial waste under conditional use permits.
The current ownership structure dates to June 2008. Shoosmith Bros., Inc. owns and operates the landfill, while VWS Holdco, Inc. serves as the parent holding company. The First Day Declaration describes VWS Holdco as wholly owned by non-debtor VWS Acquisitions, LLC, which 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 and Paul Lawrence McGee as vice president. Volunteer Enterprises—the proposed DIP lender—is owned 50/50 by Nichols and McGee, the same insider relationship that runs through the prepetition debt.
The landfill operates 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.
Insider-Held Notes and Bridge Financing
The debtors entered bankruptcy owing approximately $183.5 million in secured obligations held by insider-affiliated entities, comprising $24.7 million in Senior Notes, $158.4 million in Junior Notes, and $500,000 in Bridge Notes. The primary indebtedness arose under an Amended and Restated Securities Purchase Agreement dated April 30, 2020, under which VWS Holdco issued Senior Notes and Junior Notes in original principal amounts of $35.8 million and $64.9 million. The Senior Notes carry first-priority liens and the Junior Notes second-priority liens on substantially all of the debtors' assets.
Through a Non-Recourse Securities Assignment Agreement effective January 27, 2023, Volunteer Enterprises, LLC acquired the Notes and became the Notes Collateral Agent. Because Volunteer is owned equally by the debtors' president and vice president, the assignment consolidated the secured debt with company insiders, and Volunteer later proposed to serve as the DIP lender. On May 27, 2025, days before the petition date, the parties executed a third amendment to the Securities Purchase Agreement creating the $500,000 Bridge Notes to fund bankruptcy preparation. The Bridge Notes carried liens ranking pari passu with the Senior Notes, and the debtors intended to roll them up into the DIP facility.
The Virginia Department of Environmental Quality required the debtors to maintain roughly $19.3 million in financial assurance for closure and post-closure obligations through two surety bonds issued by Evergreen National Indemnity Company: a closure bond of about $6.6 million and a post-closure bond of about $12.7 million. To secure those bonds, Evergreen holds approximately $14.7 million in cash collateral, a portion of the debtors' remaining liquid assets, as described in the First Day Declaration.
Expansion Denial, Gas Royalties, and Leachate Costs
The bankruptcy followed a series of operational and regulatory issues described in court filings.
Blocked expansion, 2016–2018. An adjacent rock quarry operated by Vulcan Materials was scheduled for conversion to roughly 30 million tons of additional airspace, and in February 2016 the Virginia DEQ issued a permit authorizing the use. Chesterfield County challenged the permit and blocked the expansion, and in July 2018 the county Board of Supervisors denied the land-use application for the conversion. Subsequent litigation against the county was unsuccessful. The First Day Declaration states that the denial forced the company to write off about 17 million tons of planned capacity. A 2004 Virginia Supreme Court case documented earlier disputes between the operator and the county.
Closure and lost revenue, December 2022. With expansion blocked and capacity exhausted, the landfill ceased accepting waste on December 30, 2022, ending the debtors' primary revenue stream while environmental obligations continued. The debtors downsized staff and retained consultants for the closure process, which—managed by related entity Shoosmith Construction—includes placing intermediate and final cover, repairing erosion damage, cleaning sediment basins, replacing storm piping, and installing slope down drains. Property transfers in 2024 reduced the landfill footprint from 506 to 335 acres and cut permitted design capacity from 75.89 million to 42.1 million cubic yards.
The Swift Creek Renewables gas contract. In April 2020, Shoosmith Bros. contracted with Morrow Energy, through subsidiary Swift Creek Renewables, LLC ("SCR"), to capture, treat, and sell landfill methane through pipeline networks; the gas qualifies for special treatment under federal policy for its cellulosic renewable value, as described in the First Day Declaration. 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, with the first gas transfer on September 13, 2023.
Royalties below projection. The SCR transaction entitled Shoosmith to a 25% royalty on gas production, with projections exceeding $1.0 million per month. A contractual provision halved royalties until SCR recovered "Reimbursable Costs" estimated not to exceed $8.0 million. Actual results differed sharply, according to the CRO's declaration:
Metric
Projected
Actual
SCR Construction Costs
~$40 million
Higher
Reimbursable Costs Cap
$8 million
$42+ million
Monthly Royalty
$1+ million
<$50,000
February 2025 Royalty (paid May)
—
$44,379
March 2025 Royalty (due June)
—
~$13,920
Because reimbursable costs reached more than $42 million against the $8 million cap, royalties stayed reduced far longer than anticipated, holding post-closure revenue below $50,000 per month.
Environmental violations, June 2024. On June 20, 2024, Shoosmith received a letter from the Virginia DEQ asserting violations of Air Pollution Control Law, including high-temperature wells, destruction of the synthetic closing cap's integrity, and leachate generation exceeding engineering estimates. Shoosmith contends that SCR caused these conditions through the manner in which it drilled the landfill liner during methane capture, allegations that remain disputed.
Leachate contract termination, July 2024. Effluent leachate—the contaminated liquid generated when precipitation percolates through decomposing waste—requires continuous removal and treatment. Until July 3, 2024, Shoosmith held a contract with Chesterfield County to treat leachate at the county's Publicly Owned Treatment Works for $0.02 per gallon, keeping monthly treatment costs between $30,000 and $50,000. According to the First Day Declaration, a former employee allegedly falsified the quantity and chemical analysis of the leachate delivered to the county, triggering suspension and termination of the contract. Forced to use private providers, the debtors now pay $0.22 per gallon ($0.15 treatment plus $0.07 transportation), an "eleven-time cost increase" the debtors called unsustainable given that they "now have relatively no income." The landfill generates about 400,000 gallons of leachate weekly, or roughly 20.8 million gallons annually, pushing annual treatment costs above $597,000 against a 2017 estimate of about $18,950 that county documents note the company has not updated.
The 60-Day Chapter 11 Case
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 three days earlier on May 29, 2025, submitted the First Day Declaration. The debtors stated two purposes for the filing: addressing the Swift Creek Renewables contract and leachate-removal issues, and initiating a sale to preserve value and provide for continued operation and closure under a new owner. They later moved to reject the SCR executory contract and sought standard first-day relief, including joint administration, cash management, employee wages, , , and .
DIP financing never finalized. The proposed DIP lender, Volunteer Enterprises, LLC, was the same insider entity that held the prepetition Senior and Junior Notes. The DIP motion, filed June 2, 2025, proposed a senior secured superpriority term loan of up to $5.4 million—$4.9 million in new money plus a $500,000 roll-up of the Bridge Notes—with $1.8 million on the initial interim draw, Volunteer acting as DIP agent, and a 13-week budget tied to the sale milestones. The court entered an interim DIP order on June 4 and a second interim order on July 2, but no final DIP order was ever entered.
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, raising concerns about the financing structure's environmental implications. The Official Committee of Unsecured Creditors also objected, arguing the DIP served as an insider-protection device rather than a value-maximizing bridge. The committee alleged that the debtors' directors had extracted more than $31 million in the year before the petition date, including about $29.88 million in cash payments to Volunteer, and that the DIP budget allocated only $200,000 to committee professionals against roughly $2.15 million for debtor professionals. It also challenged liens on avoidance-action proceeds and broad releases for insiders and related parties.
Interrupted sale process. The debtors retained Teneo Securities LLC as investment banker to market substantially all assets. The bidding procedures order, entered July 1, 2025, contemplated a stalking-horse framework with a break-up fee of up to 3% and expense reimbursement of up to $150,000, a July 28 bid deadline, an August 4 auction, and an August 20 sale hearing. The sale motion and sale hearing notice had been filed in June and early July, but the conversion to chapter 7 ended the process before any transaction closed.
Committee formation. The Official Committee of Unsecured Creditors was appointed and retained Greenberg Traurig, LLP as counsel. The committee's involvement was brief: its counsel's retention was approved on July 30, 2025, one day before conversion.
The debtors retained Pashman Stein Walder Hayden, P.C. as bankruptcy counsel, Carl Marks Advisory Group LLC as chief restructuring officer (Steven F. Agran), and Teneo Securities LLC as investment banker. Verita Global (Kurtzman Carson Consultants, LLC) served as claims and noticing agent. The Official Committee of Unsecured Creditors retained Greenberg Traurig, LLP as counsel.
Post-Closure Environmental Obligations
A debtor in possession must continue to comply with environmental rules during chapter 11, including air emissions, water discharge, and hazardous waste requirements, and responsible parties bear liability for remediation costs under CERCLA. Post-closure monitoring can run 30 years or more after a landfill stops accepting waste, so the Shoosmith facility, closed in December 2022, carries compliance obligations into the 2050s.
For Shoosmith, the Elevated Temperature Landfill designation, documented integrity failures in the synthetic cap, and roughly 400,000 gallons of weekly leachate drive those obligations. The $19.3 million in surety bonds, backed by $14.7 million in cash collateral held by Evergreen, provides the financial assurance for closure and post-closure work. The facility's elevated-temperature status falls under tightening methane requirements that add to operators' compliance costs.
Frequently Asked Questions
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.
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 over falsified reports, private treatment providers charged $0.22 per gallon including transportation—an eleven-fold increase 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 order was entered July 31, 2025, after interim DIP approval but before any sale closed.
Why was venue transferred to Virginia?
The venue moved to the Eastern District of Virginia, the district encompassing Chesterfield County where the landfill sits. Chesterfield County, the Virginia DEQ, and surety issuer Evergreen all supported the transfer.
How much debt did the debtors have?
The debtors entered bankruptcy with about $183.5 million in prepetition secured debt: $24.7 million in Senior Notes, $158.4 million in Junior Notes, and $500,000 in Bridge Notes, all held by insider-affiliated entities.
Who is the claims agent for VWS Holdco?
Verita Global (Kurtzman Carson Consultants) served as the claims and noticing agent. The conversion order relieved Verita of most noticing responsibilities as of the July 31, 2025 conversion date, subject to local-rule compliance in the transferred chapter 7 case.
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This article was researched and written with AI assistance, using court filings, public records, and news sources. AI-generated content can contain errors. Verify all information against primary sources before relying on it. This is not legal or financial advice. Read our full disclaimer.
