Guardrail Whistle-Blower’s Company Seeks Court Protection

A Virginia guardrail company belonging to a man who won a whistle-blower verdict against competitor Trinity Industries Inc. filed for bankruptcy.

Spig Industry LLC of Bristol, Virginia, had no income in 2014, according to its bankruptcy filing.

In October, a federal jury in Marshall, Texas, found that Trinity defrauded the U.S. of $175 million by making changes to its ET-Plus guardrail system, designed to absorb the impact of a crash, without telling federal safety regulators. The whistle-blower lawsuit was brought by Joshua Harman, who with his brother Christopher helps run Spig Industry.

In the whistle-blower case, Joshua Harman stands to gain as much as a third of the final judgment, which could range from $525 million to $709 million.

Harman said his company had to file for bankruptcy protection to prevent the foreclosure of its manufacturing plant and the 20-acre site on which it sits.

Spig’s only work for the past year has been making components for guardrail systems for use in local projects in Virginia, Harman said Tuesday in a phone interview.

The company listed assets of $21 million and debt of $11.7 million in court filings Monday in U.S. Bankruptcy Court in Roanoke, Virginia.

Trinity shares have risen almost 15 percent after a pair of favorable findings by federal regulators. The Federal Highway Administration concluded on March 11 the Dallas-based company didn’t try to hide alleged defects in its shock-absorbing devices, and on March 13 it said the devices had passed a second round of crash tests.

‘Opportunistic Litigant’

Jeff Eller, a Trinity spokesman, declined to comment on Spig’s bankruptcy.

Trinity has described Harman in court documents as “an opportunistic litigant hoping for a windfall.” He is seeking “to retaliate against Trinity for pursuing a patent-infringement lawsuit against his companies,” Trinity has said.

That patent case, settled confidentially in 2012, pushed Harman’s company into an earlier bankruptcy due to the “exorbitant expense” of the litigation, Harman said.

The new bankruptcy filing lists the “rights” created from the patent settlement as worth $12 million. Harman declined to comment on the figure.

Trinity has said it will appeal the verdict in the whistle-blower case. Both parties are currently involved in mediation to try to reach a settlement.

The case is In re. Spig Industry LLC, 15-70310, U.S. Bankruptcy Court, District of Western Virginia (Roanoke).

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