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Friday, August 9, 2013

MM&A Granted Creditor Protection In Wake Of Lac-Mégantic Disaster

Per www.globalinsolvency.com:

Fri., August 9, 2013
 
The Canadian subsidiary of Montreal, Maine & Atlantic Railway, whose train ravaged Lac-Mégantic, got the creditor protection it was seeking, but the Quebec Superior Court judge who granted its request had some harsh words for the railway’s directors, The Globe and Mail reported. Justice Martin Castonguay granted the stay of proceedings against the railway company on Thursday to “avoid judicial anarchy.” However, the judge initially excluded the directors of Montreal Maine & Atlantic Canada from the court’s protection. To earn that privilege, the judge explained, directors must “act in good faith.” “The tribunal is not impressed at all by the way MM&A behaved,” Justice Castonguay said. “Since the beginning of the events, their conduct has been totally lamentable,” he added. But the judge later changed his mind when the lawyer representing MM&A’s Canadian affiliate, Denis St-Onge, pointed out that allowing lawsuits to proceed against the railway’s directors might deplete the company’s $25-million insurance policy, leaving little money for other claimants such as the Quebec government, which is now footing the clean-up bill. Justice Castonguay then ordered a stay of proceedings against the company’s directors, but only in relation to claims pertaining to the train derailment and the ensuing explosions. This would still allow former employees to seek compensation for their unpaid vacation, a situation their union, the Syndicat des Métallos, denounced as a “theft” on Wednesday.

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