Lac-Megantic blast settlement fund tops $200M ahead of filing next month

Smoke rises from tanker cars in downtown Lac-Megantic, Que., on July 6, 2013.
Smoke rises from tanker cars in downtown Lac-Megantic, Que., on July 6, 2013. Paul Chiasson/The Canadian Press

PORTLAND, Maine — A proposed settlement fund for victims of a fiery train derailment that claimed 47 lives in Canada is nearly halfway to a goal of $500 million in funding commitments ahead of its filing next month, the defunct railroad’s bankruptcy trustee said.

For our full coverage on the Lac-Megantic derailment, click here

More than a dozen corporations that face potential liability in the Lac Megantic, Quebec, oil train disaster have agreed to pay over $200 million to the fund and that sum could more than double by the time judges in the U.S. and Canada sign off, bankruptcy trustee Robert Keach told The Associated Press.

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Keach, the trustee in the Montreal, Maine & Atlantic Railways bankruptcy case, is casting a wide net as he seeks to build the fund to compensate victims. The names of contributors and other companies targeted for contributions are confidential, he said.

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Much of downtown Lac Megantic was destroyed on July 6, 2013, by a raging fire caused when an unattended train with 72 oil tankers began rolling downhill toward the town of 10,000 people.

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More than 60 tankers derailed and several exploded.

Forty-seven people died, and dozens of buildings were destroyed.

After filing for bankruptcy, Montreal, Maine & Atlantic was sold for $15.85 million but virtually all of that money went to repay creditors.

Keach said he’s committed to getting as much money as possible for the victims.

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A year ago, Keach sued World Fuel Services Corp., owner of the crude oil, and several other companies, accusing them of downplaying the volatility of the crude from North Dakota’s Bakken shale region. Canada’s transportation agency said the crude was roughly as flammable as unleaded gasoline.

World Fuel Services is presumed to be among the 20 or so companies targeted to contribute to the settlement. Keach also has asked for discovery documents from oil companies and subsidiaries including ConocoPhillips, Shell Trading U.S. Co., and Marathon Oil Corp.

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Companies that choose not to participate in the settlement fund could be sued individually by victims. Wrongful death lawsuits are currently on hold pending the outcome of the settlement proposal.

READ MOREQuebec coroner says 47 Lac-Mégantic deaths were ‘violent, avoidable’

Even if the settlement is approved, that wouldn’t mean the end of the case.

Criminal charges are pending in Canada against three railway employees, including one accused of failing to set enough brakes on the train.