Assets of bankrupt Montreal, Maine and Atlantic Railway sold in Canada after clearing regulatory approval

Robert Keach
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Posted June 30, 2014, at 5:25 p.m.

PORTLAND, Maine — Sale of the Canadian assets of the former Montreal, Maine and Atlantic Railway closed Monday, about one year after a fiery derailment killed 47 people in the Quebec town of Lac-Megantic and forced the railroad into bankruptcy.

Bankruptcy trustee Robert Keach confirmed the sale Monday in an email to the Bangor Daily News and said he is working with people who have liabilities to establish a settlement fund he hopes will allocate hundreds of millions of dollars to compensate victims of the accident.

The railroad faces civil lawsuits in the United States and a class-action lawsuit that awaits certification in Canada. The government of Quebec also has entered a $409 million claim against the bankrupt railroad for cleanup and reconstruction in Lac-Megantic.

In filing that legal action, Quebec Justice Minister Stephanie Vallee said that any successful claims against the railroad should benefit victims of the disaster and their families.

All of the former railroad’s assets belong to New York-based Fortress Investment Group, operating as the Central Maine and Quebec Railway, which closed on its purchase of Montreal, Maine and Atlantic Railway’s U.S. assets in May. It bought the company’s U.S. and Canadian assets for $15.85 million.

John Giles, president and CEO of the new entity, said at the time that he planned to invest up to $10 million in track improvements in the next year. He said that the east-west sections of track were in most dire need of fixing, with a section in Canada between Sherbrooke and Farnham that needed “a lot of love and attention and money.”

Giles’ company received a certificate of fitness to operate in Canada last week, and the proceeds of the sale will be used to repay creditors, victims and their families. That will supplement a $25 million insurance policy held by the company and the fund Keach said he is working to build.

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