BANGOR, Maine — The sale of property owned by Montreal, Maine and Atlantic Railway would pay fees associated with the railroad’s bankruptcy if a proposal submitted Monday is approved.
All the land and tracks the railway owns in Maine are being held as collateral by the Federal Railroad Administration against a $34 million loan made to MMA in 2005.
“This is a backstop to ensure that the administrative fees are paid,” Robert Keach, the Portland lawyer appointed as trustee for MMA during the bankruptcy proceeding, said late Monday.
U.S. Bankruptcy Judge Louis Kornreich has expressed concern at previous hearings that once administrative fees to lawyers and business consultants were paid, there would not be enough money left to compensate victims and their families or take the necessary actions to get the company out of bankruptcy.
MMA filed for Chapter 11 bankruptcy in Bangor and Canada on Aug. 7, a month after one of its trains rolled driverless down a hill before derailing in the middle of the town of Lac-Megantic, Quebec, causing a fiery explosion that killed 47 people.
Keach said all the property owned by the railway, except a small parcel in Vermont, is located in Maine. That includes the repair facility in Derby, the headquarters in Hermon and all the track, the trustee said.
Once the railway is sold, up to $5 million from the sale would be “carved out” from the money owed the FRA, according to court documents.
A carve-out of collateral is not unusual in business bankruptcies, Keach said.
Keach has asked Kornreich to hold a hearing Oct. 1, when the judge will consider a motion to create a committee to represent the estates of victims and their families during the bankruptcy proceeding.
Nineteen wrongful death lawsuits have been filed in Chicago.
A motion to move those case to U.S. District Court in Maine is pending before U.S. District Judge John Woodcock. A hearing date has not been set.