Yahoo Finance US judge OKs $338 mn settlement in Canada rail disaster
A US bankruptcy court approved Friday a Can$445 million ($338 million) settlement for victims of the fiery 2013 Lac-Megantic rail disaster in Quebec that killed 47 people.
US bankruptcy Judge Peter Cary in the state of Maine gave final approval of an agreement that includes about Can$111 million in compensation for the families of deceased victims.
About Can$220 million will go to the province of Quebec and the village of Lac-Megantic for environmental cleanup and infrastructure repair.
The remainder of the settlement will resolve claims of injured survivors and property damage, said Robert Keach, an attorney at Bernstein Shur Sawyer & Nelson, who served as trustee for debtor Montreal, Maine & Atlantic Railway, the owner of the train.
"Obviously no amount of money is going to make up for what happened here and we don't pretend that it fully compensates the victims for everything except in a monetary sense," Keach said in a telephone interview.
"But it's a good settlement all the way around."
The settlement is funded by about two dozen parties, including oil companies, insurers and tank car companies.
US-based Montreal, Maine & Atlantic filed for bankruptcy protection about a month after the accident, saying it could not face the huge cost of the cleanup or damage payments to victims.
- Epic Canadian rail disaster -
The settlement, included in a plan of the company's liquidation approved Friday by Cary, constitutes a landmark in one of the worst rail disasters in Canada's history.
The July 2013 derailment and explosion occurred after a 72-car train containing crude oil came loose in the middle of the night, rolled downhill unmanned and derailed in the center of Lac-Megantic, Quebec.
Several tanker cars exploded, unleashing an inferno that gutted 2.5 square kilometers (one square mile) of the picturesque lakeside town of 6,000 residents, about 250 kilometers (155 miles) east of Montreal.
Firefighters needed two days to put out the raging blaze which also destroyed 40 buildings and 53 vehicles. Seven of the 47 dead have not been identified.
In an August 2014 report, officials with Canada's Transportation Safety Board sharply criticized Montreal, Maine & Atlantic for running improper brake tests on substandard tanker cars and said Canadian rail regulators had not done enough to boost oversight on increased oil rail shipments due to the US shale boom.
The assets of the railway were auctioned off in May 2014 to an affiliate of New York firm Fortress Investment Group for $15.85 million. The new owners have renamed the company the Central Maine & Quebec Railway.
An August 2015 open letter to the community from John Giles, chief executive of Central Maine, alluded to residual community skepticism, including "myths" about poor safety on the line and a secret plan to resume oil shipments.
Giles pointed to more than $22 million in upgrades, vowed it was upholding the "social compact" with the community and promised there was no plan for oil shipments.
"As far as I can determine, there is currently not great demand to move crude on CMQ's lines," Giles said.
"But, things change all the time, so here is my commitment to you: If things do change, I will come to the town, as I have done in the past, and meet with you and your leaders to discuss this possibility."
