Lawyer: MMA bankruptcy likely to end in sale
The Montreal, Maine and Atlantic Railway will continue operating for at least two weeks using a $6 million line of credit, a federal bankruptcy judge ruled Thursday.
The Bangor Daily News reported the ruling comes as a Canadian judge granted permission for MMA’s sister company, the Montreal, Maine and Atlantic Canada Co., to seek bankruptcy protection in that country. The Hermon-based company will use a $6 million line of credit from Wheeling & Lake Erie Railway Co. to continue paying employees’ salaries and benefits.
Roger A. Clement, attorney for the U.S. operation, told the paper after the hearing in Kennebec County Court that since the disaster, the company’s monthly income has been halved, from $2 million to $1 million. He said that the railroad hopes to recover those costs when it resumes operations through eastern Quebec, which he said could happen as soon as Canadian authorities complete their investigations.
Clement told the paper it is highly likely that bankruptcy proceedings in the United States and Canada will end in the sale of the company.
Maine Department of Transportation Commissioner David Bernhardt told the paper that the bankruptcy proceedings may cause a slowdown but not additional stoppages of rail service along MMA’s lines. He said the four other Maine-based freight operators have expressed willingness to assume MMA’s workload or work with a court-appointed trustee to run the company as the proceedings continue.
In addition to owing its largest creditors a total of $39 million, governmental officials estimate the cleanup cost for the accident to be around $200 million and relatives of the 47 people killed in the disaster are also pursuing a class-action lawsuit that could claim tens of millions in additional damage.
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