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.
The company filed the documents on Wednesday and was seeking relief from its creditors under the Companies' Creditors Arrangement Act.
The CCAA allows companies protection while they work out ways of avoiding bankruptcy.
Wednesday's court filing came on the same day that the company's sister firm, the Montreal, Maine & Atlantic Railway, initiated proceedings for Chapter 11 bankruptcy protection in a U.S. court.
The filings come as MMA faces lawsuits and enormous cleanup costs following the fiery July 6 crash that wiped out the downtown core of Lac-Megantic, set off several explosions and killed 47 people.
MMA estimates the cleanup costs will surpass $200 million.
Montreal, Maine & Atlantic Canada Co. says in its court documents it has just under $18 million in assets.
Documents filed in U.S. court say MMA 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.
"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-Megantic," Ed Burkhardt, chairman of both companies, said in a statement Wednesday.
"A process under Chapter 11 and the CCAA is the best way to ensure fairness of treatment to all in these tragic circumstances."
Company attorney Roger Clement said he anticipates there will be serious consideration to putting the railroads up for sale to repay creditors.
An unattended MMA train carrying crude oil roared into Lac-Megantic and derailed, setting off massive fireballs and destroying dozens of buildings in the community of 6,000 people. Burkhardt has blamed the train operator for failing to set enough handbrakes.
The town and the Quebec government have sent legal notices to the railway, demanding that it reimburse Lac-Megantic $7.8 million in environmental mop-up costs after millions of litres of crude oil were released into the environment.
Burkhardt has said the railway was depending on its insurers to start cutting cheques to address the contamination. One expert in civil responsibility has questioned whether the company's insurance would be enough to cover the huge costs and said taxpayers could be stuck with a bill in the hundreds of millions of dollars.
Source: Yahoo News/Canadian Press
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