December 19, 2013

Judge approves bidding process for bankrupt Maine railroad

Meanwhile, MM&A trains rolled into Lac Megantic, Quebec, for the first time since the July disaster that took 47 lives.

By David Sharp
The Associated Press

As the first trains rolled into Lac-Megantic, Quebec, since a derailment and fire killed 47 people there in July, a federal bankruptcy judge approved bidding procedures Wednesday for the auction of the Maine-based railroad.

click image to enlarge

Workers comb through debris in Lac-Megantic, Quebec, on July 9, three days after an unmanned train with 72 railway cars carrying crude oil derailed, causing explosions that killed 47 people. The Canadian town is 10 miles from Maine’s northwestern border.

The Associated Press

The action in a courtroom in Bangor came on the day the first Montreal, Maine & Atlantic Railways train rolled into Lac-Megantic since July 6.

Bankruptcy trustee Robert Keach said the goal is to sell the railroad’s operations in Maine and Canada in a way that allows the rail service to continue.

“We think we’ll have a robust auction process that will produce a buyer or buyers who will operate the railroad in the public interest,” he said.

Any proceeds from the company’s sale would be used to repay creditors and victims, supplementing $25 million in insurance payouts available for wrongful death, personal injury, property damage, fire suppression and environmental impact. Critics say the cost of the cleanup alone will exceed $25 million.

There’s already a “stalking horse” bid of $14.25 million from Railroad Acquisition Holdings LLC, which is affiliated with Fortress Investment Group, a publicly traded investment company. But there are more than a dozen prospective buyers and there could be additional bids at next month’s auction.

Keach said all potential bidders have been queried about their operating plans. The goal is to get the best price to recoup losses and to retain the rail line, he said.

On July 6, an unmanned Montreal, Maine & Atlantic Railway train with 72 oil tankers began rolling after it was left unattended by the lone crew member, who parked it at the end of his shift.

The train picked up speed and derailed in downtown Lac-Megantic, causing an explosion and fire that destroyed about 40 buildings in the community 10 miles north of the Maine border.

Before Wednesday, only a couple of test trains had come into town, and Mayor Colette Roy-Laroche said the restoration of rail service will happen slowly. No dangerous substances will be transported through town, she said.

Roy-Laroche told reporters in Canada this week that psychological aid will be available for people who are traumatized by the return of the trains.

The timetable approved by the bankruptcy judge Wednesday puts the U.S. case on the same timetable as a companion case in Canada that covers the railroad’s assets there. It calls for competing bids for the company’s assets to be submitted by Jan. 17, with the auction beginning Jan. 21.

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