PORTLAND — Parties who believe they have a right to any proceeds from the liquidation of the bankrupt Montreal, Maine & Atlantic Railway have until mid-June to file claims.
At a hearing Tuesday, the federal judge overseeing MM&A’s bankruptcy proceedings granted a motion to set June 13 as the deadline for claims, known as the bar date.
MM&A, based in Hermon, filed for Chapter 11 bankruptcy Aug. 7, a month after one of its trains rolled driverless down a slight incline, derailed and exploded in Lac-Megantic, Quebec, killing 47 people and destroying much of the town’s downtown area.
There is still uncertainty, however, on how decisions in the bankruptcy case of MM&A’s Canadian subsidiary will affect how those claims are collected. In a normal bankruptcy case, parties making claims would be expected to file what are known as proofs of claim in both Canadian and U.S. bankruptcy courts, said Michael Fagone, an attorney with Bernstein Shur who represented Robert Keach, MM&A’s trustee Tuesday.
However, to make it easier for those affected by the Lac-Megantic disaster to file claims, Fagone said the trustee has agreed to recognize proofs of claim filed in Canada if the Canadian court adopts a process acceptable to the trustee. The Canadian court is expected to establish the procedure sometime next week, he said.
“We don’t want to make it any more difficult than it needs to be,” Fagone said after the hearing. “It’s all designed to make it easier for the Canadian victims to file.”
Fortress Investment Group, a New York-based investment firm, is the prospective buyer of MM&A’s assets. Railroad Acquisition Holdings, a Fortress affiliate, won a bankruptcy auction on Jan. 21. MM&A’s trustee and Fortress are expected to close on the deal by the end of March. Fortress expects to continue operating the railroad, which connects Montreal with Bangor, Millinocket and Searsport, but will change the name to Central Maine and Quebec Railway.
Also Tuesday, Judge Louis Kornreich ruled that a group representing the 47 wrongful death claimants in Lac-Megantic, known as the unofficial committee, was not in compliance with a particular bankruptcy law and would not be recognized by the court until that was remedied. Daniel Cohn, the lawyer for the unofficial committee, said he would file amended paperwork within 48 hours. After the hearing, Cohn said the judge’s ruling wasn’t a major problem, and that he had thought his paperwork was adequate. The ruling is likely to delay action on some elements of the bankruptcy case. Cohn said that was unfortunate because any delay in the proceedings ends up costing the MM&A estate more.
“It’s a bad thing when people are ready to solve problems” but are prevented from doing so, he said.
Whit Richardson can be contacted at 791-6463 or at: