After its runaway train train killed 47 people last month in Quebec, there’s been a Chapter 11 filing by Montreal, Maine & Atlantic Railway, a subsidiary of Rosemont-based Rail World Inc. The filing arrives after assessing its likely liability from a derailment and explosion last month that killed 47 people in Quebec.
Companies that underinsure create involuntary creditors when they injure or kill people, and leave the financial cost to fall on the injured person or co-defendants. Indeed, if one accepts the argument of Garlock and others, the bankruptcies of "major defendants " caused the financial risk of asbestos litigation to shift to other defendants. Perhaps some day we will see minimum insurance requirements from states, or perhaps other businesses will demand that vendors carry significant insurance. Until then, there no doubt will be more press releases similar in theme to the press release issued by Railworld.
"Press Release
Wednesday, August 7, 2013: 1400 EST
Montreal, Maine & Atlantic Files for Bankruptcy In Canada & the U.S.
Montréal, August 7, 2013 – Montreal, Maine & Atlantic Canada Co. ("MMA Canada") announces
that it has filed a petition seeking relief under the Companies’ Creditors Arrangement Act (“CCAA”)
in the Superior Court of Québec in Montréal. Simultaneously, Montreal, Maine & Atlantic Railway,
Ltd. ("MMAR") has filed for protection under Chapter 11 of the United States Bankruptcy Code by
filing a case in the U.S. Bankruptcy Court for the District of Maine.
MMA Canada also announced that Richter Advisory Group agreed to act as the Court Appointed
Monitor of the Canadian company.
Edward Burkhardt, Chairman of the Board of both companies,said, “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-Mégantic, Québec on July 6th, and a
process under Chapter 11 and the CCAA is the best way to ensure fairness of treatment to all in these
tragic circumstances”. Furthermore, he stated that “MMA wishes to continue to work with the
Québec Ministry of the Environment, the municipality of Lac-Mégantic, and other government
authorities in the continuing environmental remediation and clean-up as long as is necessary, and will
do everything within its capacity to achieve completion of such goal.”
The bankruptcy case is In re Montreal Maine & Atlantic Railway, 1:13-bk-10670, U.S. Bankruptcy Court, District of Maine (Bangor).