The trustee for bankrupt Montreal, Maine & Atlantic Railway wants lawyers for the 47 victims of last year’s train derailment and explosion in Lac-Megantic, Quebec, to explain to a bankruptcy judge how they plan to make decisions, or else be thrown out of the case.
Portland attorney Robert Keach said the lawyers haven’t filed a statement to verify that they are acting together, nor provided details on any agreements they might have among themselves on fees and other matters. He wants the bankruptcy judge to exclude the victims’ lawyers and have their previous filings thrown out until they provide an explanation, which he said is required under federal court rules.
A hearing on the matter is scheduled for March 12.
A train operated by the railroad rolled unattended down a hill into the small Quebec town last July, derailing and touching off an explosion of dozens of tanker cars carrying crude oil. The explosion killed 47 and damaged or destroyed dozens of buildings in the small lakeside town. The railroad, based in Hermon, filed for bankruptcy the following month, has since been sold to an investment fund and will be renamed the Central Maine & Quebec Railway.
Keach said the move is largely technical, and that he is not trying to bar the lawyers from taking part in the case, although he disagrees with how they want to allocate the railroad’s $25 million insurance policy.
“No one says they’re not worthy claimants,” Keach said Wednesday.
Without a statement, he said, there’s no way for the court to know whether a majority vote of the lawyers representing the families of those who died is needed to file a motion or approve a settlement. Some unofficial committees – to differentiate from official creditors’ committees – operate by having a few lawyers make all the decisions, he said, or they could require a vote of a certain number of the lawyers to take action.
In a filing with U.S. Bankruptcy Court in late January, the lawyers’ group said they were establishing an unofficial committee and listed their clients, but didn’t provide any information on how decisions were going to be made. The group’s Bangor lawyer, George W. Kurr, of Gross, Minsky and Mogul, could not be reached for comment Wednesday evening.
In his filing, Keach asked the court to reject a proposal by the victims’ lawyers for how to split a payout from the company’s $25 million insurance policy.
Keach said the lawyer group failed to explain how it reached a decision on the proposal, adding that the proposal itself is “unworkable.”
The lawyers want 75 percent of proceeds from the insurance policy to go to the families of those who died in the explosion, and the rest to those whose property was damaged or destroyed. But, Keach said, others who suffered from the explosion, including those who were injured, are ignored in that formula.
In any case, the insurance policy will be a very small piece of a final settlement that could include payments from manufacturers of rail equipment and those who owned the oil being transported. Keach has said previously that the final settlement, including funds for environmental cleanup, could easily total $700 million by the time all the lawsuits are heard.
Also Wednesday, Keach said he supports a filing by the railway’s new owners to allow trains to resume full operations before the expiration of a 60-day notice period included in federal rules.
The renamed Central Maine & Quebec Railway filed a request for a waiver of the notice period late last week with the federal Surface Transportation Board. Waiving the notice period would allow the CM&Q to resume service between Quebec and Maine and allow Fortress Investment Group’s purchase to go through on or soon after March 17, the filing said.
Keach said the sooner the railroad begins to run its full route, the better. “It’s in everybody’s best interests to get the sale concluded and allow them to begin operating,” he said.
Edward D. Murphy can be contacted at 791-6465 or at: