Watch above: Turmoil in Lac Megantic (August 8)
MONTREAL – The embattled railroad at the centre of the deadly Lac-Megantic train derailment was granted creditor protection in Canada on Thursday.
A Quebec Superior Court justice handed down the ruling after a request by Montreal, Maine & Atlantic Canada Co., a firm facing hundreds of millions of dollars in lawsuits, other legal claims and environmental-cleanup costs linked to the disaster.
Justice Martin Castonguay told a Montreal courtroom he hopes the decision will limit the “judicial anarchy” of multiple creditors simultaneously seeking cash from the insolvent railway through separate legal avenues.
Castonguay also criticized as “lamentable” the railway’s actions since the July 6 disaster that killed 47 people and destroyed much of downtown Lac-Megantic.
“The court is not at all impressed with the conduct of MMA since the start,” he said without elaborating, shortly after granting the creditor protection.
Asked about the judge’s remarks, a lawyer representing MMA in Canada declined to comment.
But Denis St-Onge did say he was satisfied with Castonguay’s ruling, which he expected would speed up the legal process.
“We will have one single forum within which all the claims will be assessed,” said St-Onge, who believes the court decision will allow MMA to restart rail service in Lac-Megantic and maximize the value of its assets.
“MMA will no longer be the same, but the people over there, the businesses over there, I think they need a railway, either it’s MMA or it’s someone else. And in the meantime, some of them need a railway badly.”
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The attorney representing the municipality of Lac-Megantic was pleased that one court would now be in control of how creditors will eventually be paid.
“The judgment will organize the liquidation of MMA,” said Louis Coallier.
“It’s a legal (decision), but it’s also a human decision.”
READ MORE: Railway says it can’t pay for Lac-Megantic cleanup
In court documents filed on Wednesday, the company said it was seeking relief from its creditors under the Companies’ Creditors Arrangement Act, a request made as it faces a growing number of lawsuits, legal notices and cleanup costs MMA estimated will exceed $200 million.
The railway also stated in the filing that the Canadian firm has just under $18 million in assets and insurance coverage of $25 million, cash it has yet to receive from its insurer.
The company’s woes also made their way into a U.S. court, where parent firm Montreal, Maine & Atlantic Railway Ltd. initiated proceedings Wednesday for Chapter 11 bankruptcy protection.
The railway also stated in the filing that the Canadian firm has just under $18 million in assets and insurance coverage of $25 million, cash it has yet to receive from its insurer.
READ MORE: Who will pay for cleanup? Legal battle brewing over Lac-Megantic spill
The company’s woes also made their way into a U.S. court, where parent firm Montreal, Maine & Atlantic Railway Ltd. initiated proceedings Wednesday for Chapter 11 bankruptcy protection.
Documents filed in the Maine court say the parent company has between $50 million and $100 million in estimated assets and between $1 million and $10 million in estimated liabilities.
The bankruptcy-court filing was posted on the website of Maine’s Bangor Daily News.
Ed Burkhardt, chairman of both firms, said in a statement Wednesday that the “obligations of both companies now exceed the value of their assets, including prospective insurance recoveries.”
READ MORE: Profile: Who is MMA Railway chairman Ed Burkhardt?
The unattended MMA train had a load of crude oil when it rolled down a hill and derailed in the heart of Lac-Megantic, a devastated town of 6,000 people that is still struggling to recover from the disaster.
In Canada, Castonguay said future hearings on the matter would be presided over by another judge in the region of Lac-Megantic, which is about 250 kilometres east of Montreal. The next court hearing is scheduled for Aug. 23.
“The people of (Lac-Megantic) have a right to know what’s going on,” said Castonguay, adding they should not be forced to make a two-hour drive to Montreal to follow proceedings.
IN PICTURES: Lac-Megantic one month on
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