Repost from The Montreal Gazette
Plans are finally taking shape for financial compensation of derailment victimsBy Monique Beaudin, Gazette environment reporter April 20, 2014
Nine months after a runaway oil train derailed in Lac-Mégantic, killing 47 people and destroying a large chunk of the town, a plan for financially compensating disaster victims is taking shape.
Judges in Quebec and Maine have approved a joint cross-border process for victims of the accident to file claims against Montreal, Maine and Atlantic Railway and its Canadian operations, Montreal, Maine and Atlantic Canada. The two companies have been under bankruptcy protection since August.
Thousands of claims related to the derailment are expected to be filed against MMA. Public information meetings on the financial-claims process are to begin in Lac-Mégantic next week. Claims must be filed by the middle of June.
People who lost family members, homes and businesses have turned to Canadian and American courts for financial compensation, but the process has been slow. The estates of several of the 47 people killed on July 6 have filed wrongful-death lawsuits in the U.S. Lawyers have also begun proceedings to bring a class action in Quebec. Quebec has already ordered six companies to clean up and decontaminate the town, a move that is facing a legal challenge.
The American lawyer overseeing MMA’s U.S. bankruptcy proceedings himself admits figuring out how victims will be compensated is “quite complicated”.
One of the biggest questions is who has the money to pay for the accident — compensating victims and secured creditors, covering cleanup costs and paying damages that several companies are claiming as a result of the derailment.
MMA was sold in January to New York-based Railway Acquisitions Holdings, for $14.25 million, less than what it owes its secured creditors.
That leaves a $25-million insurance policy and the possibility of a settlement fund composed of contributions from several companies targeted by legal action after the accident, said Robert Keach, MMA’s U.S. Chapter 11 trustee.
Another possible source of financial compensation for victims could come from a lawsuit Keach filed against World Fuel Services, Western Petroleum and Petroleum Transport Solutions, the companies that arranged for the shipment of the crude oil on the train. Keach argued they were to blame for the accident since the oil had been mislabelled as being less volatile than it actually was.
New York-based lawyer Luc Despins is counsel to a victims’ committee made up of residents, the town of Lac-Mégantic and the Quebec government. The committee represents victims’ interests in MMA’s American bankruptcy proceedings, offering input on issues like the compensation process, he said.
Despins said the committee’s goal is to get as much money as possible to the Lac-Mégantic victims as quickly as possible. But, he cautioned, not all claims filed may be accepted.
“If someone agrees their house was worth $600,000 and they got the full $600,000 from their insurance company, and that’s their only claim, they should not be recovering twice, this is not a lottery,” he said. “They may have other claims, but as far as the house I gave as an example is concerned, they can’t recover twice.” The courts will decide who has a valid claim, Despins said.
LOGISTICS: WHAT’S NEXT FOR VICTIMS OF THE DISASTER
Victims of the accident have until June 13 at 5 p.m. to file a proof of claim against Montreal, Maine and Atlantic.
Public information meetings on the claims process are to be held in Lac-Mégantic between April 22 and May 5, and assistance will be provided to help people complete the claims forms, according to an order issued by Quebec Superior Court. Victims who do not file a claims form by June 13 will not be permitted to participate in the Canadian or U.S. bankruptcy proceedings or receive any payment made available in those proceedings.
Claims forms and information about the claims process are posted on the website of Montreal-based Richter Advisory Group, the company’s Canadian bankruptcy monitor, at www.richter.ca under “Insolvency Cases” or http://bit.ly/mmamonitor.
LEGAL ACTIONS INVOLVING VICTIMS OF LAC-MÉGANTIC
A request has been filed to approve a class-action lawsuit in Quebec against MMA, World Fuel services, Irving Oil, Canadian Pacific, the federal government and others. More than 1,550 people have registered with the class action so far.
A committee of three Lac-Mégantic residents, a representative of the Quebec government and the town of Lac-Mégantic represents victims’ interests in MMA’s U.S. bankruptcy proceedings.
The estates of 19 people killed in the Lac-Mégantic train derailment filed wrongful-death lawsuits in Illinois, naming several defendants, including MMA, company chairman Edward Burkhardt, MMA’s parent company Rail World, and World Fuel Services, which arranged for the transportation of the crude oil on the train. All except two of those lawsuits have been withdrawn while American courts decide where they will be heard. A law firm representing the estates says it plans to appeal a recent decision from a U.S. federal judge ordering the cases transferred to Maine, where MMA’s bankruptcy proceedings are being held. One of the issues at play is the amount of money that could be awarded as damages. Illinois has no cap on such payments, while Maine limits them to $500,000 in wrongful-death cases.
POSSIBLE SOURCES OF FINANCIAL COMPENSATION
A $25-million insurance policy MMA has with XL Insurance. Many people and companies are interested in the insurance policy. They include:
– Victims of the Lac-Mégantic derailment, such as the families of people killed in the accident, those who were injured or those who suffered losses to their businesses or homes.
– CIT Group, a company that owned some of the locomotives and tank cars involved in the accident. CIT has said it plans to settle any claims against it from wrongful-death lawsuits tied to the derailment with the XL insurance policy.
– MMA chairman Edward Burkhardt, who has been named in several legal actions linked to the derailment, argued in U.S. bankruptcy court that he is covered by the policy.
Settlements from legal action taken by MMA’s bankruptcy trustee against World Fuel Services.
The creation of a settlement fund made up of financial contributions from companies that may be liable for the accident.
TIMELINE OF THE LEGAL FALLOUT
July 6, 2013: A 72-car oil train pulled by five locomotives unexpectedly rolls down railway tracks into the town of Lac-Mégantic. Most of the cars derail, leading to explosions and a fire that kills 47 people and destroys much of the downtown core. Nearly 6 million litres of crude oil spill in the accident.
July 15, 2013: Lac-Mégantic lawyer Daniel Larochelle and two other law firms file a request in Quebec Court to begin class action proceedings against MMA and 14 other companies and individuals.
July 22, 2013: Annick Roy files a wrongful-death lawsuit in Illinois court on behalf of the estate of Jean-Guy Veilleux and their daughter. Veilleux was killed July 6.
Aug. 7, 2013: MMA files for bankruptcy protection in Canada and the U.S.
Aug. 14, 2013: A total of 19 wrongful-death cases have been filed in Illinois court.
Aug. 22, 2013: The Quebec government announces the creation of a victims’ committee to represent Lac-Mégantic residents, the government and the town in the U.S. bankruptcy proceedings.
Jan 23, 2014: Bankruptcy judges in Canada and the U.S. approve the sale of MMA to Railway Acquisitions Holdings of New York for $14.25 million U.S.
Feb. 12, 2014: Lawyers for the proposed Quebec class action add Transport Canada to the list of more than 50 organizations and people it plans to sue.
Feb. 26, 2014: A joint Canada-U.S. bankruptcy meeting between creditors tries to speed up the pace of the claims process.
April 2014: The MMA sale to RAH is expected to be finalized.
June 13, 2014: This is the proposed deadline for victims and creditors to file claims against MMA in the Canadian and U.S. bankruptcy proceedings.
WHAT’S HAPPENING WITH MONTREAL, MAINE AND ATLANTIC
The railway company whose runaway oil train derailed in Lac-Mégantic on July 6, 2013. It is in the process of being sold to Railway Acquisition Holdings, a New York City -based company, for $14.25 million U.S. RAH plans to change the name of the company to Central Maine and Quebec Railway, and offer rail service on MMA’s 800 kilometres of tracks in the two countries.
RAH is acquiring two companies:
Montreal, Maine and Atlantic Railway
- Parent company of Montreal, Maine and Atlantic Canada.
- Operates a shortline railroad in Vermont and Maine.
- Under Chapter 11 bankruptcy protection since August.
Montreal, Maine and Atlantic Canada
- Railway operating in Quebec.
- Under bankruptcy protection since August.