Funds unlocked to keep embattled MMA railway operating for several weeks

MONTREAL – Insolvent Montreal, Maine & Atlantic Railway, which was at the heart of a disaster that devastated Lac-Megantic on July 6, will continue operations in Canada for a few weeks thanks to a Quebec court decision on Friday.

Justice Martin Castonguay of Quebec Superior Court approved a request to unlock $250,000 so the railway can purchase accident insurance that it requires to obtain its operating licence.

The decision allowed the railway to recover its certificate of rail capacity from the Canadian Transportation Agency, which was removed on Aug. 13 pending the final court decision.

MMA has been operating under court supervision while the short-haul railway sorts out massive claims arising from the deadly Lac-Megantic train derailment that left 47 people dead and destroyed a section of the community’s downtown core.

The Canadian Transportation Agency had said Thursday that the court’s approval would satisfy its requirement to regain the licence it temporarily withdrew Aug. 13. The renewed licence would allow it MMA to operate until Oct. 1.

MMA had objected to the suspension of its operating certificate, arguing that the sudden stop of its operations in Canada would undermine efforts to find a buyer.

The court-appointed monitor told the court that failure to unlock the funds would have disastrous consequences for the economy, several Quebec municipalities, and the railway’s employees.

MMA’s lawyers argued on Wednesday that the railway still serves 60 clients across the country.

Castonguay told the court on Friday that “in the best of worlds” the company’s administrators would “put their hands into their (own) pockets” to pay some of the costs of the disaster.

He said the request to unlock the funds for insurance made sense and the cessation of the company would be to the detriment of creditors, including victims and a host of companies.

Robert Grindrod, MMA’s president, declined to comment afterward on the judge’s comments about adminstrators helping to pay.

“I don’t know what the judge said,” he replied.

“I don’t speak French.”

He wouldn’t venture an opinion even when journalists repeated the judge’s comments in English.

Lawyers representing the Quebec government, Lac-Megantic and plaintiffs in the pending class-action lawsuit all agreed it was better to keep MMA on the rails.

“Normally, that would maximize the amount that creditors would receive,” said Louis Coallier, who represents Lac-Megantic.

“We should not undestimate the fact that the railway provides an essential service for many businesses in the region.”

Elsewhere in Montreal, members of a Federation of Canadian Municipalities committee urged swift federal government action on railway safety.

The group called for municipal first responders to be equipped for rail emergencies; for federal regulations and industry policies to address rail safety concerns of municipalities; and for costs of rail safety and emergency response not to be dumped on taxpayers.