Railroad files for bankruptcy
Montreal, Maine & Atlantic faces $200M to cleanup after Lac-mégantic disaster
MONTREAL — The embattled railroad at the centre of the deadly Quebec train derailment has filed for bankruptcy protection in Canada and the U.S. amid a flurry of lawsuits and growing cleanup costs the company estimates will surpass $200 million.
The Montreal, Maine & Atlantic Railway initiated proceedings Wednesday for Chapter 11 bankruptcy protection in a U.S. court, while its sister firm in Canada presented a petition in Quebec Superior Court seeking relief from its creditors under the Companies’ Creditors Arrangement Act.
“It has become apparent that the obligations of both companies now exceed the value of their assets, including prospective insurance recoveries, as a direct result of the tragic derailment at Lac-Mégantic,” Ed Burkhardt, chairman of both companies, said in a statement.
“A process under Chapter 11 and the CCAA is the best way to ensure fairness of treatment to all in these tragic circumstances.”
Documents filed in U.S. court say MMA has between $50 million and $100 million in estimated assets and between $1million and $10 million in estimated liabilities. The bankruptcy-court filing was posted on the website of Maine’s Bangor Daily News.
In Canada, court documents filed under the CCAA by Montreal, Maine & Atlantic Canada Co. state it has just under $18 million in assets. The CCAA allows companies protection while they work out ways of avoiding bankruptcy.
Robert Grindrod, president of the Maine-based railway, appeared for the filing in the Montreal courtroom, where several lawyers representing a number of interests were also present.
Jeff Orenstein is a member of a legal team that presented a motion last month to file a classaction lawsuit, on behalf of two Lac-Mégantic residents, against MMA, Burkhardt, Grindrod, train operator Tom Harding and other individuals and companies allegedly linked to the crash.
Orenstein said either way he will continue his legal fight for his clients.
The filings come as the company faces lawsuits and enormous cleanup costs following the fiery July 6 crash that wiped out the downtown core of LacMégantic, set off several explosions and killed 47 people.
An unattended MMA train carrying crude oil roared into Lac-Megantic and derailed, setting off massive fireballs and destroying dozens of buildings in the community of 6,000 people. Burkhardt has blamed Harding for failing to set enough handbrakes.
Meanwhile, some residents of Lac-Megantic who remain evacuated from their homes were told at a meeting on Tuesday they won’t be able to return to their dwellings for a year.
Quebec environment officials said significant decontamination work is still required, and, if soil is too contaminated, some residents may never be able to return to their homes.
Police have transferred control of the hardest hit area to the city, which has hired a security company to keep watch on the devastated downtown zone.
Both the Quebec provincial police and the Transportation Safety Board of Canada continue to investigate.