Railroad files for bankruptcy in wake of Quebec disaster
The Montreal, Maine and Atlantic Railway has filed for protection from creditors in Maine and Canada, just 33 days after one of its oil trains careened unattended through the Quebec town of Lac-Mégantic and derailed, killing 47 people.
The Portland Press Herald reported the company may seek a buyer or a way to sort out its debts so it can continue operating. Ed Burkhardt, the railroad’s chairman, said in a written statement that the company’s obligations outstrip its assets and that the bankruptcy process is the “best way to ensure fairness of treatment to all in these tragic circumstances.”
Montreal, Maine & Atlantic Railway filed for Chapter 11 bankruptcy protection in Maine. Montreal, Maine & Atlantic Canada, a sister company that shares the same president and chairman, filed a petition with the Superior Court of Quebec in Montreal for protection from its creditors under the Companies’ Creditors Arrangement Act, according to The Globe and Mail.
The filing confirmed worries of Maine officials, who began speaking with the state’s four other freight operators late last month about taking over the rail service should MMA declare bankruptcy. Companies depending on that rail line to ship products through and out of the state have had to find other shipment options, often costing more, in the interim.
Should the railroad stop operating, the Press Herald reported, federal regulators have the authority to order another operator to take over and provide service to its approximately 200 customers. Gov. Paul LePage said in a written statement Wednesday that the Maine Department of Transportation will participate in the bankruptcy proceedings and any regulatory measures to continue service on that line.
In bankruptcy filings, the company estimates it is worth between $50 million and $100 million and that it owes around $39 million to its largest creditors. The largest, and one of two secured creditors, is the Federal Railroad Administration, which is owed $27.5 million on a $34 million loan issued in March 2005.
The second secured creditor is the Wheeling & Lake Erie Railway Co., which is owed $6 million for a line of credit issued in 2009.
The company also lists 17 unsecured creditors claiming around $5.5 million from the company. That includes eight claims the company plans to dispute and a nearly $800,000 claim from Chairman Burkhardt for “indemnification and/or contribution in connection with wrongful death litigation and other claims.” Burkhardt was named as a defendant in a lawsuit filed in July by two Lac-Mégantic residents seeking class-action status for the claims.
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