MONTREAL—The embattled rail firm at the heart of the Lac-Megantic, Que., rail disaster has filed for bankruptcy protection.
Montreal, Maine & Atlantic (MMA) announced Aug. 7 both its Canadian and American divisions filed petitions in Quebec and Maine courts, respectively, putting an end to weeks of speculation that the company was bankruptcy bound.
The company said the decision was made based on financial obligations and civil claims filed against it in the wake of the disaster, including a demand from the Quebec and Lac-Megantic municipal governments for MMA to cover clean up costs in excess of $7-million.
“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, Que., on July 6,” Ed Burkhart, chairman of both companies, said in a statement.
“A process under Chapter 11 and the CCAA (Companies’ Creditors Arrangement Act) is the best way to ensure fairness of treatment to all in these tragic circumstances.”
MMA Canada said Richter Advisory Group will act as the court appointed monitor for it north of the border as it proceeds through legal proceedings in the Superior Court of Quebec.
According to MMA, rail service will continue at all stations in Maine, Vermont and Quebec—with the exception of Lac-Megantic—subsequent to the bankruptcy filings.
It said service to Lac-Megantic “could be restored as soon as the authorities allow such service and to the level that they consider appropriate.
The approximately 85 employees currently working for the two companies will remain employed for the time being, according to MMA, and will receive their regular wages and benefits.