By Tom Hals
Sept 12 (Reuters) – A judge should appoint a broad committee
of victims of a deadly train explosion in Quebec to resolve a
split among claimants in the railway operator’s U.S. Chapter 11
bankruptcy, according to a U.S. bankruptcy watchdog.
A flurry of lawsuits have been filed in the wake of the
devastating blast in Lac-Megantic and victims have clashed over
the best way to press their claims against Montreal, Maine &
Atlantic Railway Ltd.
An MMA train loaded with crude oil derailed and exploded in
the town on July 6, killing 47 and causing widespread property
and environmental damage.
A month later, the company filed for bankruptcy in Bangor,
Maine.
The U.S. Trustee, a Department of Justice official who
oversees bankruptcy cases, asked the bankruptcy court to appoint
a broad committee covering property owners, government entities
and those killed or hurt.
“No victim should be excluded from representation,” he said
in papers filed by William Harrington, the U.S. Trustee in
Portland, Maine.
A hearing on the dispute is scheduled in Bangor on Friday at
10 a.m. EDT in front of Judge Louis Kornreich.
U.S. bankruptcies allow creditors to form court-recognized
committees that negotiate a settlement of claims. The bankrupt
company provides a budget and the committee can hire legal and
financial advisers.
Potential claimants, however, had split over who should get
a seat on a committee.
Attorneys for many of those killed or injured asked the
court to give them their own committee, which they said will
promote due process for the victims who speak French and are
unfamiliar with U.S. law.
They argued in court papers that wrongful death and bodily
injury claimants had rights that others do not have, including
the right to a trial to determine their damages.
One of their attorneys, Daniel Cohn of Murtha Cullina in
Boston, declined to comment.
A separate group that includes the Province of Quebec as
well as property owners backed the U.S. Trustee’s approach,
according their lawyer Luc Despins of Paul, Hastings, Janofsky &
Walker.
An attorney who was appointed by the court to oversee the
company, Robert Keach of law firm Bernstein Shur, argued for no
committee at all.
That is because Montreal, Maine & Atlantic falls under a
special area of the bankruptcy code reserved for railroads. In
such cases, a trustee like Keach is appointed to oversee the
company and that trustee owes a duty to all creditors.
As a result, creditor committees in railroad cases are
unusual.
MMA has about $37 million in secured and unsecured debt, but
faces claims that could run into the hundreds of millions of
dollars for wrongful death, bodily injury, property and
environmental damage.
An estimated 1.48 million U.S. gallons (5.6 million liters)
of oil were spilled in the crash.
(Reporting by Tom Hals in Wilmington, Delaware; editing by G
Crosse)
