September 5, 2013

Troubled Maine railway may be sold by year's end, trustee says

Railroad trustee Robert Keach says he already has been approached by several potential buyers.

The Associated Press

PORTLAND — The bankrupt railroad whose runaway train sparked a fire and explosion that killed 47 people in Quebec could be sold by year's end, the company's trustee said Thursday.

click image to enlarge

In this July 31, 2013 file photo, a crew from Montreal, Maine & Atlantic Railway works to put a derailed locomotive back on the tracks in Brownville. The process of selling the bankrupt railroad whose runaway train killed 47 people in Quebec is under way and the company's trustee hopes to complete the deal by year's end.

Tom Bell / Staff Writer

click image to enlarge

In this Tuesday, July 16, 2013 file photo, workers stand before mangled tanker cars at the crash site of a train derailment and fire in Lac-Megantic, Quebec, that happened on July 6. The bankrupt railroad whose runaway train sparked a fire and explosion that killed 47 people in Quebec could be sold by year's end, the company's trustee said Thursday.. (AP Photo/Ryan Remiorz, Pool, File)

Montreal, Maine & Atlantic Railway has made no secret that its sale will be necessary to repay creditors and victims following the July 6 disaster Lac-Megantic, Quebec. And railroad trustee Robert Keach said he's already been approached by "several" potential buyers.

"There is a sale process that has already begun. We're talking to interested parties," said Keach, a Portland attorney. He declined to name any of the potential buyers.

The company filed for bankruptcy protection a month after the disaster, and the sale of the Hermon-based railroad would have to be approved by U.S. Bankruptcy Court. If a buyer purchases all 512 miles of rail in Maine and Canada, then the deal would have to be approved by officials in both countries.

Montreal, Maine & Atlantic Railway continues to operate but has laid off most of its workers because rails through Lac-Megantic remain out of commission, disrupting the flow of goods.

Next week, Keach hopes to file with U.S. Bankruptcy Court a proposal for a loan that'll help the company continue operations through the bankruptcy process.

Keach also plans to file a proposal for funding bankruptcy administration costs that he says would not drain funds that should go to creditors and victims. A judge previously said he was concerned that attorney fees could drain the company of funds before victims of the train crash could be compensated.

Company Chairman Ed Burkhardt discussed the idea of selling the company soon after the unattended train, with 72 tankers of crude oil, began rolling and derailed in downtown Lac-Megantic, a lakeside town of 6,000. Several tankers exploded, destroying 40 buildings. It took nearly two days to douse the flames.

According to documents filed in bankruptcy court, the railway company is worth $50 million to $100 million, but Keach declined to discuss how much the company might sell for.

Any proceeds from the company's sale would be used to repay creditors and victims, supplementing $25 million in insurance payouts available for wrongful death, personal injury, property damage, fire suppression and environmental impact. Critics say the cleanup alone will exceed $25 million.

Keach said he expects to formalize a process for selling the railroad in the coming weeks, and he remains optimistic that a deal can be struck by Jan. 1.

"It's moving as I would expect. Everybody involved in the process thinks it should be and can be completed by year's end," Keach said.

There's a possibility, however, that regulatory approvals in the two countries could take longer than that, pushing the sale into early 2014, he added.

 

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