Judge approves committee to represent disaster victims in railroad bankruptcy case

The remains of a burnt train are seen in Lac Megantic, Quebec, on July 8. Montreal, Maine & Atlantic Railway, the company involved the month's deadly derailment in Lac-Megantic, filed for Chapter 11 bankruptcy protection on Aug. 7, saying the move would enable the company to preserve the value of its assets.
Mathieu Belanger | Reuters
The remains of a burnt train are seen in Lac Megantic, Quebec, on July 8. Montreal, Maine & Atlantic Railway, the company involved the month's deadly derailment in Lac-Megantic, filed for Chapter 11 bankruptcy protection on Aug. 7, saying the move would enable the company to preserve the value of its assets.
Posted Oct. 18, 2013, at 5:02 p.m.

BANGOR, Maine — A U.S. Bankruptcy judge Friday gave victims of the Lac-Megantic, Quebec, fatal rail disaster a seat at the table in the Montreal, Maine and Atlantic Railway bankruptcy.

Judge Louis Kornreich granted a motion to form a committee of three to seven people to represent victims’ interests in bankruptcy proceedings. He authorized the U.S. Trustee for the bankruptcy court to “appoint a committee of sufficient size and diversity so that the purpose of this authorization is fulfilled.” The judge did not authorize the committee to employ professionals other than a lawyer to represent it.

In a separate order, Kornreich approved a motion to pay the administrative fees of the bankruptcy from the sale of land and tracks and other property owned by the railroad. The property is being held as collateral by the Federal Railroad Administration against a $34 million loan made to MMA in 2005. Once the railway is sold, up to $5 million from the sale would be “carved out” from the money owed the FRA, the judge ruled.

Kornreich said that creating the victims’ committee is a “departure from common practice” in railroad bankruptcies in his four-page order. “The authorization of an additional committee is an extraordinary remedy that courts are reluctant to grant,” he wrote.

The judge said that “it is apparent to all that the victims of the Lac-Megantic derailment are creditors and parties-in-interest, who have suffered great physical, psychological and economic harm. It is equally clear that the victims are not of a single type.”

Forty-seven people were killed in the disaster.

Some have lost family members and have filed wrongful death claims, Kornreich said. Others may be survivors with personal injury claims or people who have lost their home, livelihoods and property.

“Others may be non-governmental agencies or entities and agencies of the Canadian federal government, the Province of Quebec, and the municipality that have contributed aid and shelter to the victims or devoted assets to the cleanup and restoration efforts,” he wrote. “All of these victims deserve a right to be heard in these proceedings.”

Kornreich said that without the committee, it would be difficult for victims living in Quebec to participate in court proceedings in Bangor because most speak French, are unfamiliar with U.S. bankruptcy law and may not be able to afford to hire American attorneys to represent them.

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