Maine firm in Quebec tragedy files for bankruptcy

AP News
Posted: Aug 07, 2013 5:57 PM
Maine firm in Quebec tragedy files for bankruptcy

PORTLAND, Maine (AP) — A rail company whose runaway oil train caused a fire and explosion that killed 47 people in a small town in Canada filed for bankruptcy protection in the U.S. and Canada on Wednesday, and an attorney said he expects company executives to explore putting it up for sale within weeks.

In its filings, Montreal, Maine & Atlantic Railway Ltd. and its Canadian counterpart, Montreal, Maine & Atlantic Canada Co., cited debts to more than 200 creditors following the disaster in Lac-Megantic, Quebec.

Attorney Peter Flowers, who represents 30 of the victims' families, accused company Chairman Ed Burkhardt of trying to use the legal system to shield his companies from legal responsibility.

"It's totally outrageous. It's sickening. It's a guy that has refused to take responsibility for the natural disaster that he caused," Flowers said from Chicago.

Burkhardt said previously that a company bankruptcy filing was likely following rail service disruptions because its rail line remains closed in Lac-Megantic. The Hermon-based company, which continues to operate, faces lawsuits and enormous cleanup costs following the July 6 disaster.

The parked train, with 72 tankers full of crude oil, was unattended when it began rolling toward town, eventually derailing downtown. Several tankers exploded, destroying 40 buildings in the lakeside town of 6,000 residents.

The company blamed the train's operator for failing to set enough hand brakes.

The Canadian government, which already has announced $60 million to help in the response and recovery, insisted it'll be seeking damages from the rail company.

"This announcement does not mean that MM&A is off the hook for their responsibilities to the people of Lac-Megantic," Transport Canada spokeswoman Ashley Kelahear said.

A spokeswoman for Lac-Megantic Mayor Colette Roy-Laroche said the municipality wouldn't comment on Wednesday's announcement because of ongoing legal proceedings.

The town and the Quebec government have sent legal notices to the railway, demanding it reimburse Lac-Megantic nearly $8 million in environmental mop-up costs.

Burkhardt responded that the rail company intends to work with the Canadian government "in the continuing environmental remediation and cleanup as long as is necessary."

For now, however, the bankruptcy process stops payments to all creditors while setting up a process overseen by a judge in which payments will eventually be made.

Company attorney Roger Clement said he anticipates there will be serious consideration to putting the railroads up for sale to repay creditors.

In Maine, Montreal, Maine & Atlantic Railway Ltd. filed for Chapter 11 bankruptcy protection. In Quebec, Montreal, Maine & Atlantic Canada Co. sought relief under Canada's Companies' Creditors Arrangement Act. MM&A Canada also announced that Richter Advisory Group agreed to act as the court-appointed monitor in Canada.

The Maine Department of Transportation has looked into how rail service would continue through a court-appointed trustee in bankruptcy court or through an alternative operator appointed by the Surface Transportation Board if rail service is discontinued.

The companies employ 85 people in Maine and Canada after the temporary layoffs of dozens of workers because of service disruptions. They previously employed 179 workers.


Associated Press writer Rob Gillies in Toronto contributed to this report.


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