December 18, 2013 10:15 pm

Rail service resumes in Lac-Megantic as judge OKs auction of railroad

Above: The people of Lac-Megantic, were forced to confront their tragic memories as trains began running through town again. Mike Armstrong has their story.

PORTLAND, Maine – As the first trains rolled into a Quebec town devastated by a derailment and fire that killed 47 people, a federal bankruptcy judge approved bidding procedures Wednesday for the auction of the Maine-based railroad that owned the train.

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The action in a courtroom in Bangor came on the same day the first Montreal, Maine and Atlantic Railways trains rolled into Lac Megantic, Quebec, since the July 6 disaster.

READ MORE: Lac-Megantic mourns as it reconstructs

Trustee Robert Keach said the goal is to sell the railroad’s operations in Maine and Canada in a way that allows the rail service to continue.

“We think we’ll have a robust auction process that’ll produce a buyer or buyers who’ll operate the railroad in the public interest,” he said.

Any proceeds from the company’s sale would be used to repay creditors and victims, supplementing $25 million in insurance payouts available for wrongful death, personal injury, property damage, fire suppression and environmental impact. Critics say the cleanup alone will exceed $25 million.

There’s already a “stalking horse” bid of $14.25 million from Railroad Acquisition Holdings LLC, which is affiliated with Fortress Investment Group, a publicly traded investment company. But there are more than a dozen interested buyers and there could be additional bids at next month’s auction.

Keach said all potential bidders have been queried about their operational plans. The goal is to get the best price to recoup losses and to retain the rail line, he said.

GALLERY: The people of Lac-Megantic have put up a Christmas tree for each of the 47 victims of July’s disaster, plus one more in honour of a firefighter who recently took his life.

In the July derailment, an unmanned Montreal, Maine and Atlantic Railway train with 72 oil tankers began rolling after it was left unattended by the solo crew member who parked it at the end of his shift.

The train picked up speed and derailed in downtown Lac-Megantic, causing an explosion and fire that destroyed about 30 buildings in the community 10 miles north of the Maine border.

READ MORE: Transport Canada looking to expand risk assessments for dangerous goods

Before Wednesday, there had been only a couple of test trains running into town, and Mayor Colette Roy-Laroche said the restoration of rail service will happen slowly. No dangerous substances will be transported through the town, she said.

Smoke rises from derailed rail cars which were carrying crude oil in Lac Megantic, Que., July 6, 2013.

Paul Chiasson/The Canadian Press

Roy-Laroche told reporters in Canada earlier this week that psychological aid will be available for people traumatized by the return of the trains.

The timetable approved by the bankruptcy judge Wednesday puts the U.S. case on the same timetable as a companion case in Canada that covers the railroad’s assets there. It calls for competing bids for the company’s assets to be submitted by Jan. 17 with the auction beginning Jan. 21.

© The Canadian Press, 2013

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