Quebec judge calls disaster railway 'deplorable', grants protection

Thu Aug 8, 2013 2:11pm EDT
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By Leila Lemghalef

MONTREAL (Reuters) - A Quebec court granted bankruptcy protection on Thursday to the U.S. railway whose runaway train smashed into a tiny Quebec town, killing 47 people, but Judge Martin Castonguay called Montreal Maine & Atlantic's behavior "deplorable" and said he was not impressed by its management.

"This decision is to prevent legal anarchy," Quebec Superior Court Judge Castonguay told the courtroom after approving the bankruptcy protection for MMA's Canadian unit.

MMA filed for protection in Canada and the United States on Wednesday, saying its revenues had deteriorated since the July 6 crash and it could not afford to pay its mushrooming financial obligations.

The company's runaway crude oil train derailed in the small lakeside town of Lac-Megantic, Quebec, exploding in huge fireballs that destroyed a swathe of the town's core. An estimated 5.6 million liters of crude oil were spilled.

The bankruptcy filing sparked anger in Lac-Megantic, where residents fear victims' families may not get the compensation they are seeking through several class-action and individual suits against the company in U.S. and Canadian courts.

The governments of Quebec and the town of Lac-Megantic have also been demanding MMA foot the cleanup bill, which already amounts to C$7.8 million ($7.6 million). Canadian officials vowed on Thursday to make the railway pay for the damage.

Quebec Health Minister Rejean Hebert said the provincial government was seeking status in the bankruptcy case as a "privileged creditor," which would assure it would receive payment from MMA before some other claimants.

"We are assured of having a guaranteed creditor status which allows us to come before a few other people," Hebert told French-language RDI television. "We're going to use all the necessary legal procedures to go out and seek what we are due, both from MMA and the insurers."   Continued...