UPDATE 3-Railway in deadly Quebec explosion files for bankruptcy

Wed Aug 7, 2013 6:22pm EDT
 
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By Louise Egan and Tom Hals

OTTAWA/WILMINGTON, Del. Aug 7 (Reuters) - The railway whose runaway train killed 47 people in Lac-Megantic, Quebec, last month filed for bankruptcy protection in Canada and the United States on Wednesday as it faces mounting pressure from authorities to pay for the disaster cleanup.

Montreal, Maine & Atlantic Ltd (MMA) filed for bankruptcy in both countries to preserve the value of its assets for a potential sale, according to court documents filed with the U.S. Bankruptcy Court in Maine.

It said total monthly revenues of its Canadian and U.S. units had dwindled to about $1 million since the derailment, given the closure of its main line between Quebec and Maine.

"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, Quebec, on July 6," MMA Chairman Ed Burkhardt said in a statement.

In Canada, the bankruptcy petition was filed to the Quebec Superior Court in Montreal under the Companies' Creditors Arrangement Act.

A hearing is scheduled for Thursday in Bangor, Maine.

The July 6 crash was the worst of its kind in North America in two decades. The driverless MMA train careened into the small, lakeside town of Lac-Megantic, where it derailed, causing massive explosions and a wall of fire that obliterated the town center and killed those in its path. An estimated 5.6 million liters of oil were spilled.   Continued...