Following the runaway train disaster in Quebec that killed 47 people, a judge has reluctantly approved the U.S. railway company's request for bankruptcy filing, as reported by the Bangor Daily News and other media outlets.
Judge Martin Castonguay, upon granting the bankruptcy protection to the Canadian Unit of the Montreal Maine & Atlanta, MMA, said that their request was both "deplorable" and that he only made the decision "to prevent legal anarchy."
Furthermore the judge claimed that he was far from impressed with the management of the MMA.
The crash occurred in a small Quebec town on July 6. MMA claims that its revenues had declined to such a point that they could no longer afford to cover their financial obligations.
When MMA's crude oil train derailed in Lac-Megantic the runaway train exploded, causing large fireballs to destroy the town. The estimated amount of crude pole that was spilled was near 6 million liters.
Lac-Megantic family members are disheartened to learn of the bankruptcy approval as there are several lawsuits, both class action and individual, that are pending in U.S. and Canadian courts. Lac-Megantic and Quebec governments are demanding that MMA pay to cleanup the town – as the bill so far is allegedly $7.6 million.
Quebec is seeking "privileged creditor" status to be paid before others. Rejean Hebert, the Quebec Health Minister, said, "We are assured of having a guaranteed creditor status which allows us to come before a few other people. We're going to use all the necessary legal procedures to go out and seek what we are due, both from MMA and the insurers."
Court documents show MMA's largest creditors to be the U.S. government, through the Secretary of Transport's Federal Rail Administration (FRA). After that MMA owes approximately $27.5 million to FRA – which holds the first lien against MMA's U.S. and Canadian real estate.
"Potential secured creditors" are listed as provincial or federal governments in Canada, for costs associated with the present and future cleanup of the city.
In a Quebec court document MMA explained that the bankruptcy is due to the fact that "it is financially impossible to continue the operations and the provision of services without the benefit of the protection from its creditors."
Lisa Raitt, the Federal Transport Minister, has pledged C$60 million for the rebuilding efforts of the town. Raitt said that the filing for bankruptcy "does not mean that MMA is off the hook for their responsibilities to the people of Lac-Megantic."
One attorney that is handling a class-action suit against MMA said that an arbitrator would be beneficial in tracking how MMA repays their debts.
Insurance covered liabilities go up to $25 million, according to the MMA Canadian petition, and is no where near enough to cover their damages. The cleanup costs alone are expected to exceed C$200 million.
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