October 21, 2013

Bankrupt railroad closes on $3 million loan

Montreal, Maine & Atlantic Railway will be able to keep operating into 2014

From Staff Reports

Montreal, Maine & Atlantic Railway Inc. closed Friday on a $3 million loan that will keep the bankrupt railroad operating into 2014, the company’s government-appointed trustee said Monday.

The Maine-based railroad filed for Chapter 11 bankruptcy protection on Aug. 7, one month after a 72-car train hauling crude oil derailed and then exploded in Lac-Megantic, Quebec, destroying the downtown area and killing 47 people.

Robert Keach, a Portland attorney appointed as trustee to oversee the bankruptcy process, has said he is working to sell the company out of bankruptcy but needed the loan to pay creditors and legal fees.

With the loan in place, officials said Monday that all Montreal, Maine and Atlantic trains in the U.S. and Canada will be staffed by two-man crews, regardless of cargo, according to the Associated Press.

The fire and explosions caused when an MMA oil train derailed in Lac-Megantic in July brought attention to the use of one-man crews to save money. The train with 72 oil tankers was left unattended by a solo crew member who was accused by the company of failing to set enough hand brakes.

Keach said Monday that there are 18 potential suitors who’ve expressed interest in buying the bankrupt railroad, the Associated Press reported.

U.S. Bankruptcy Judge Louis Kornreich earlier this month authorized the railroad to borrow the $3 million from Camden National Bank, to be leveraged against its assets.

The railroad also is facing nearly 20 accident-injury and wrongful-death lawsuits related to the derailment.

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