Montreal Maine & Atlantic chairman Edward Burkhardt - Date/Photographer unknown.
7 August 2013
MMA Files for Bankruptcy
After Lake Megantic Rail Disaster
Montreal Quebec - The U.S.-based company whose train derailed in Lake Megantic last month announced Wednesday that it has filed for bankruptcy protection in both Canada and the United States.
Montreal Maine & Atlantic Railway (MMA) issued a statement Wednesday afternoon saying it has filed for Chapter 11 bankruptcy protection in the U.S. Bankruptcy Court in Maine.
The Canadian division of the company also filed a petition under the Companies' Creditors Arrangement Act with the Superior Court of Quebec in Montreal, according to the statement.
"It has become apparent that the obligations of both companies now exceed the value of their assets, including prospective insurance recoveries," chairman Edward Burkhardt said in a statement.
Filing for bankruptcy is "the best way to ensure fairness of treatment to all in these tragic circumstances," he said.
One of the company's trains derailed in the Quebec town of Lake Megantic on 6 Jul 2013, setting off a series of explosions that flattened the downtown core and killed an estimated 47 people.
The bankruptcy filing didn't come as a surprise for the town's business leaders, who have said for three weeks that they have been planning for the town's future without MMA.
Beland Audet, the head of local transportation giant Logi-Bel, said he was pleased when he heard the news on Wednesday afternoon.
"We're seeing this with a smile, we would prefer that a new company operates the track," Mr. Audet said. "It just wasn't a good sales pitch for people to keep seeing the MMA logo going through town."
He said he hopes that a company with a good safety record and solid financials will come forward to replace MMA.
Mayor Colette Roy-Laroche would not comment on the bankruptcy filing, saying only that the town puts its faith in the judicial process.
The municipality has sent two legal notices to the company, asking for it to pay $8-million in clean-up expenses. Neither legal notice has been answered.
The company said it will continue with "essential operations" on its tracks outside of Lake Megantic. MMA will also continue its efforts to resume rail services for Lake Megantic's industrial sector, according to the statement.
After a series of layoffs, MMA employs 85 people in the U.S. and Canada.
Mr. Burkhardt could not immediately be reached for comment on Wednesday. His Illinois-based assistant, Cathy Aldana, said the railway chairman is not speaking to media, in part because he is obliged to be careful about what he says about the bankruptcy filings.