January 31

Maine's Mitchell may negotiate for some Quebec rail disaster victims

Court documents show former Sen. George Mitchell would serve as the group’s fiduciary during the railroad’s bankruptcy proceedings.

By Tom Bell tbell@pressherald.com
Staff Writer

Family members and victims of the train disaster last summer in Lac-Megantic, Quebec, want former U.S. Sen. George Mitchell from Maine installed as the lead negotiator to make sure they get as much money as possible from the bankrupt Montreal, Maine & Atlantic Railway.

The Chicago law firm Meyers & Flowers, which says it represents all the families of the 47 people killed on July 6 when a train hauling oil derailed and exploded, revealed late Wednesday that it had hired Mitchell. The firm filed a plan Wednesday for dividing money and other assets among creditors with the U.S. Bankruptcy Court in Bangor.

Robert Keach, a Portland attorney who is serving as trustee of the railroad in bankruptcy proceedings, said Thursday that the Meyers & Flowers plan is legally flawed, not serious and will likely be dismissed.

He said he believes the Illinois law firm filed the plan solely for tactical reasons related to Friday’s hearing in U.S. District Court on a motion to transfer the litigation from Illinois to Maine. He said the law firm represents a “splinter group” of victims who were invited to join an official victims committee that is working with the railroad trustee, but refused.

“I have the utmost respect for former Senator Mitchell,” he said. “I think that it is unfortunate that his good offices and good name are being borrowed for this effort, and I would hope that he would reconsider upon evaluation of all of the facts and circumstances.”

Court documents show the Chicago law firm wants Mitchell to administer the plan to disperse assets among claimants during the railroad’s bankruptcy proceedings, which will follow the railway’s $14.25 million sale to the Fortress Investment Group.

Mitchell, a Democrat, represented Maine in the U.S. Senate from 1980 to 1995.

The Hermon-based railroad was insured for $25 million, and negotiations on claims are continuing among the insurance company and other stakeholders, the law firm said.

Daniel Cohn, a Boston bankruptcy attorney working with the Chicago law firm, said the wrongful death and personal injury claimants will get a larger share of the insurance money if the case goes through a bankruptcy court in the United States rather than Canada, because U.S. law would give them the highest priority. In Canadian courts, he said, they would be competing with people whose property was damaged for a share of the insurance payout.

He said Meyers & Flowers has proposed that wrongful death and personal injury claims go through U.S. district courts and that property claims go through Quebec Superior Court, with the wrongful death and personal injury claimants receiving 75 percent of the insurance payout and the property damage claimants receiving 25 percent.

He said the Chicago firm’s clients will get money much faster if their case is separated from the property damage claims because determining the value of the property damage is more time consuming.

He said Mitchell’s role will be to negotiate an agreement among all stakeholders and the railroad trustee. “Senator Mitchell will work to help bring the parties together to divide the only significant asset the railroad has – its insurance coverage,” he said.

Keach said he will work with the Official Committee of Derailment Victims, as well as other key stakeholders including the Province of Quebec and the Canadian government, to develop a coordinated, cross-border plan that will fairly distribute not only the insurance funds, but also other expected funds, such as proceeds from sale of the railroad’s assets, for the benefit of all claimants.

On Friday, a U.S. District Court judge in Portland will hear arguments to determine whether all of the pending wrongful death and accident injury cases against the railroad should be combined into a single lawsuit and tried in Maine.

Cohn said Meyers & Flowers wants the lawsuits tried in Illinois, because Maine caps payouts in lawful death cases for damages that are not easily assigned a monetary value, such as emotional stress, at $400,000.

Meyers & Flowers is also suing some of the owners of the railroad’s parent company, Rail World, including chairman Edward Burkhardt, as well as World Fuel Services, which is accused of mislabeling the oil, and manufacturer Union Tank Car Company.

Tom Bell can be contacted at 791-6369 or at:

tbell@pressherald.com

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