MM&A Railroad files for Chapter 11 bankruptcy after Lac Megantic tragedy

Stockhouse Editorial
0 Comments| August 7, 2013


(The Canadian Press) MONTREAL _ The embattled railroad at the centre of the deadly Quebec train derailment has filed for bankruptcy protection.

The Montreal, Maine & Atlantic Railway says it filed for Chapter 11 bankruptcy protection Wednesday in the U.S.
It also said its sister company in Canada _ Montreal, Maine & Atlantic Canada Co. _ simultaneously filed a petition in Quebec Superior Court in Montreal seeking relief under the Companies' Creditors Arrangement Act, a step that would protect it from its creditors.

``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-Megantic,'' Ed Burkhardt, the 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.''

Burkhardt had said a bankruptcy filing was likely because of service disruptions on its rail line that crosses through Lac-Megantic, where the downtown core was wiped out by the fiery crash and subsequent explosions that killed 47 people on July 6.

The company also faces lawsuits and enormous cleanup costs following the disaster.

The town and the Quebec government have sent legal notices to the Maine-based railway, demanding that it reimburse Lac-Megantic nearly $8 million in environmental mop-up costs.

``MMA wishes to continue to work with the Quebec Ministry of the Environment, the municipality of Lac-Megantic, and other government authorities in the continuing environmental remediation and clean-up as long as is necessary, and will do everything within its capacity to achieve completion of such goal,'' Burkhardt said.

The train with 72 tankers full of crude oil was unattended when it began rolling, eventually tearing into the town.

Burkhardt has blamed the train's operator for failing to set enough handbrakes.

The railway also indicated Wednesday that, despite the court filings, all essential rail service would continue at all stations in Maine, Vermont and Quebec, with the exception of the still-closed railroad in Lac-Megantic.

It said it hoped to reopen that portion of the rail line as soon as authorities allow it.

Burkhardt also expressed his sympathy for those affected by the disaster.

``The people of Lac-Megantic have suffered a great deal over the last month,'' he said.

``We are joined in sorrow, a sorrow that will remain a part of me for the rest of my life.''
 

Tags: BANKS - GLOBAL

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