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Rail News: Short Lines & Regionals
Quebec accident: Montreal, Maine & Atlantic files for Chapter 11 bankruptcy protection, stops moving crude oil
Montreal, Maine & Atlantic Railway Ltd. (MMA) yesterday announced it filed for protection under Chapter 11 of the United States Bankruptcy Code through the U.S. Bankruptcy Court for the District of Maine.
In addition, Montreal, Maine & Atlantic Canada Co. (MMA Canada) filed a petition seeking relief under the Companies' Creditors Arrangement Act in the Superior Court of Quebec in Montreal, and announced that Richter Advisory Group agreed to act as the company's court-appointed monitor.
The actions are the result of claims associated with the July 6 MMA derailment in Lac-Mégantic, Quebec, that caused 47 fatalities, many injuries and significant property damage. The moves will provide the proper structure to permit the companies to serve customers, preserve well-paying jobs, provide for the payment of post-filing obligations, and ensure all creditors are treated equitably and in accordance with well-established laws, said officials at Rail World Inc. — which owns both companies — in a press release.
"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-Mégantic, and a process under Chapter 11 and the CCAA is the best way to ensure fairness of treatment to all in these tragic circumstance," said Rail World President and Chief Executive Officer Edward Burkhardt, who also serves as chairman of MMA and MMA Canada. "MMA wishes to continue to work with the Quebec Ministry of the Environment, the municipality of Lac-Mégantic 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."
Essential rail services will continue at all stations in Quebec, Maine and Vermont subsequent to the court filings (with the exception of Lac-Mégantic), and service to industries at Lac-Mégantic could be restored as soon as the authorities allow, Rail World officials said. The companies' 85 employees will receive their wages and benefits under the laws of both the United States and Canada, they said.
Burkhardt also recently announced that MMA no longer will transport crude oil primarily because of the derailment.
"We are a common carrier and are willing to ship oil," he said in an email. "[But] MMA's current policy is not to solicit trainload quantities of crude oil."
Contact Progressive Railroading editorial staff.