This move is intended to protect MMA from its creditors, to whom it owes more than 100 million. It also protects the company against the multiple lawsuits that it is facing as a result of the crash. This includes a class-action lawsuit, on behalf of two Lac-Megantic residents.
MMA claims their assets are between $50 and $100 million in the US and $18 million in Canada. The company is insured for only $25 million.
A statement by company chairman Ed Burkhardt says, “It has become apparent that the obligations of both companies now exceed the value of their assets, including prospective insurance recoveries, as a direct result of the tragic derailment at Lac-Mégantic, Que. on July 6th.”
MMA hopes to remain operational by getting the courts to protect them from their creditors, cleanup costs and impending law suits. The judge is expected to make a decision Thursday morning on the railway's request for relief from creditors. If it goes through, MMA will then try to cut a deal with its creditors and employees to keep it afloat.
Prior to tragic accident on July 6, MMA had been transporting about a half a million barrels of oil a month. According to court documents the company's aggregate monthly gross revenues dropped by a third down to about $1 million from $3 million. In response the company was quick to cut nearly one-third of its workforce in Quebec.
The small town of Lac-Mégantic has a population of only 6,000 people and it has already paid $7.8 million toward cleanup costs. However it will take at least $200 million to cleanup the town. However bankruptcy protections make it very unlikely that MMA will be paying anything towards the cleanup as the case is being settled. It is unlikely that MMA will ever cover anything close to the final costs of the cleanup.
"A process under Chapter 11 and the CCAA is the best way to ensure fairness of treatment to all in these tragic circumstances." reads the statement from Burkhardt.
This is fairness? On July 6th, 47 people were killed and a small town was decimated. In the days that followed, millions of litres of crude oil were spilled contaminating Lac-Mégantic's pristine environment. Businesses were lost, municipal buildings were destroyed, homes were demolished and thousands of peoples lives were irrevocably changed.
Those who transport fossil fuels not only contribute to the destruction of the planet they also regularly shirk their responsibilities to cleanup the messes they make. This is scandalous and goes way beyond using unsafe rail cars to transport crude oil.
How can such companies be allowed to operate if they do not have the means to address the potential impacts of accidents related to their operations? Why aren't companies forced to be bonded and insured commensurate with the potential costs of such disasters?
Both the federal and provincial governments have promised $60 million in emergency assistance and longer-term reconstruction help for the town. It is deplorable that yet again, taxpayers will be left footing the bill for this most recent fossil fuel fiasco.
© 2013, Richard Matthews. All rights reserved.
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