PORTLAND, Maine – With completion of the sale of the bankrupt railroad responsible for an oil train derailment that killed 47 people, attention now turns to creation of a settlement fund with hundreds of millions of dollars to compensate victims.
Bankruptcy attorney Robert Keach said he’s working to establish the settlement fund while sorting through the numerous claims while civil lawsuits in the U.S. are on hold and while a Canadian class-action awaits certification.
“We’re in negotiations with people who have liabilities to make a contribution to a significant nine-figure fund. Those negotiations continue,” Keach said Monday.
The fiery derailment nearly a year ago in Lac-Megantic was the worst railway accident in Canada in nearly 150 years and led to calls for making oil trains safer across North America.
The $15.85 million sale of the bankrupt railroad — the Maine-based Montreal, Maine and Atlantic — was completed Monday with transfer of the company’s Canadian assets to new ownership, officials said.
More than a month ago, parties completed the sale of the railroad’s U.S. assets to a subsidiary of New York-based Fortress Investment Group, which has renamed it the Central Maine and Quebec Railway. But the Canadian closing was delayed until regulators issued a “certificate of fitness.”
The certificate was issued last week and the Canadian sale was completed Monday with the signing of legal documents and wire transfers of money, Keach said.
Most of the money from the sale will go to creditors.
The settlement fund, however, would be used to pay out claims to victims. The total environmental cleanup alone in Lac Megantic could end up costing between $200 million and $500 million based on early estimates.
The deal was completed Monday as the community of Lac-Megantic prepares to mark the first anniversary of the disaster this coming weekend.
Train service in Lac-Megantic was restored in December. Some of the region’s biggest employers depend heavily on the railroad to transport goods. The MMA had agreed not to transport dangerous goods through the town.
John Giles, president and CEO of Central Maine and Quebec Railway, said in May that the company plans to spend $10 million on rail improvements in Canada over the next two years with a goal of resuming oil shipments in 2016.