The trustee for a bankrupt railroad said Friday that he anticipates victims of a fiery derailment that killed 47 people in Quebec could eventually share in a “nine-figure” settlement fund.

Robert Keach outlined his vision for how victims will ultimately be compensated Friday as attorneys clashed over whether lawsuits filed in Illinois should be moved to federal court in Maine, where Montreal, Maine and Atlantic Railways filed for bankruptcy following July 6 disaster in Lac Megantic, 10 miles north of the Maine border.

Keach asked U.S. District Judge Nancy Torresen to combine the lawsuits on the U.S. side of the border in Maine. A separate class-action lawsuit is proceeding in Canada, as well, he noted.

Eventually, all remaining claims including wrongful death cases, property damage and environmental cleanup would draw from the same fund set up by defendants, possibly overseen by a Canadian monitor, he said.

“I live with a goal of getting money to those victims. This is the best way to do that,” Keach said in a courtroom with more than two dozen attorneys representing various stakeholders.

A lawyer for up to 47 victims suing in Chicago said there’s no need to move the lawsuits from Illinois, where the railroad’s corporate parent and several other defendants are located. But Keach suggested litigation in multiple jurisdictions could delay reimbursement and lead to higher administration costs and legal fees.


Torresen set no timetable for a decision.

The focus in the litigation is shifting now that a subsidiary of New York-based Fortress Investment Group has won an auction for the Maine-based railroad, which owns about 500 miles of track in Maine, Vermont and Canada. The deal approved by bankruptcy judges in Maine and Quebec is expected to close in mid-March.

But little if any of the $15.85 million in proceeds from the railroad’s sale will go to victims of the disaster. Instead, the money will be used to repay creditors and settle administration costs.

The total environmental cleanup alone in Lac Megantic could end up costing between $200 million and $500 million based on early estimates, Keach said, and there’s only $25 million in insurance payouts available for wrongful death, personal injury, property damage, fire suppression and environmental impact.

Daniel Cohn, an attorney representing victims who sued in Chicago, acknowledged that settling claims will be complicated. There also are differing rules on monetary damages depending on where the lawsuits are filed. Maine caps damages, for example, while there’s no cap for lawsuits filed in Illinois.

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