October 10, 2013

Bankrupt Maine railway to get $3 million loan

Montreal, Maine and Atlantic will use the money to pay creditors and legal fees.

By Eric Russell erussell@pressherald.com
Staff Writer

A U.S. bankruptcy judge this week approved a $3 million loan to Montreal, Maine and Atlantic Railway to cover the company’s expenses while it prepares to sell its assets.

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Workers stand before mangled tanker cars Tuesday, July 16 at the crash site of the train derailment and fire in Lac-Megantic, Quebec. The July 6 accident left 47 people dead.

AP Photo/Ryan Remiorz

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Montreal, Maine and Atlantic Railway, based in Hermon, filed for Chapter 11 bankruptcy protection on Aug. 7 – one month and one day after a 72-car train hauling crude oil derailed and then exploded in Lac-Megantic, Quebec, destroying the town’s entire downtown and killing 47 people.

On Aug. 21, Robert Keach, a Portland attorney, was appointed as trustee to oversee the bankruptcy process. He has been working with Montreal, Maine and Atlantic’s owner, Ed Burkhardt, to sell the company but until that happens, there is not enough money to pay creditors and legal fees that have piled up since July, according to court documents. The railroad company already has laid off most of its workers and most of its operations have been shut down because the rail lines through Quebec are still out of commission.

The $3 million loan from Camden National Bank, authorized Wednesday, will be leveraged against Montreal, Maine and Atlantic’s assets.

Last month, Keach said he has been approached by several buyers who might be interested in the company’s 512 miles of railroad in Maine and Canada.

Rail World Inc., based in Chicago, purchased the former Bangor and Aroostook Railroad in 2002 for $50 million and formed Montreal, Maine and Atlantic. Documents filed in U.S. Bankruptcy Court estimate that the company could now be worth anywhere from $50 million to $100 million.

The bankruptcy proceedings are running on a track parallel to nearly 20 wrongful-death and injury lawsuits filed after the crash.

Last month, Keach filed a motion seeking to transfer all of those cases to Maine.

 

Staff Writer Eric Russell can be contacted at 791-6344 or erussell@pressherald.com

Twitter: @PPHEricRussell

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