The settlement fund for victims of a fiery oil train derailment that killed 47 people in a small Quebec town has grown to $345 million with a contribution from the company that owned the oil on the doomed train. World Fuel Services Corp. announced June 8 that it will pay $110 million to the Trustee for the U.S. bankruptcy estate of Montreal, Maine and Atlantic Railway Ltd., as well as the railroad’s Canadian Trustee, to resolve claims related to the July 2013 derailment in Lac-Megantic, a town about 10 miles from Maine’s northwestern border. The company expects the full settlement amount will be covered by insurance.
The railway was sued a few weeks after the crash in an Illinois state court by the estate administrator for one of the victims, who claimed that the train was inadequately staffed and negligently operated. The accident occurred after midnight on July 6, when an unattended parked freight train hauling 72 tankers of crude oil rolled downhill for more than seven miles before derailing in the town. Several tankers ruptured, leading to an explosion and fire that killed and injured many and destroyed many buildings.
Nineteen wrongful death suits over the fatal crash were moved from Chicago to Maine in March 2014, when a Maine federal judge found that they belonged in the same venue as the railroad’s already underway bankruptcy proceedings. Two months later, World Fuel Services sued Markel Corp. in North Dakota federal court, claiming the insurer improperly denied coverage for lawsuits over the catastrophe.
World Fuel Services claimed that an excess commercial liability policy a Markel unit sold to one of its joint ventures, Dakota Petroleum Transport Solutions LLC, covered the company and several affiliates for personal injury, negligence and property damage suits arising from the accident, the complaint said.
The U.S. Trustee objected to sealing the proposed settlement that will be paid to the victims, arguing that the information should remain public. Robert J. Keach, the Chapter 11 trustee for Montreal, Maine & Atlantic Railway Ltd., had moved in April to file the settlement under seal, saying he wanted to keep specific settlement amounts confidential. He said that the dollar amounts, which will be paid to the railroad’s estate by 24 groups of entities involved in the disaster, constitute “commercial information” and are protected by U.S. bankruptcy code. The attempt to seal the settlement was unsuccessful.
The settlement fund has been unanimously approved by families of the victims, according to Keach. It was to have gone to a Canadian court last month. It will go before a U.S. court in August and could be distributed in September if all goes well.
As we were getting this issue ready to go to the printer, we learned that seven people and two companies had been charged in connection with the 2013 derailment mentioned above. The persons charged are Robert C. Grindrod, CEO and president of the now-bankrupt Montreal, Maine & Atlantic Railway Ltd.; Lynne Labonte, the company’s general manager of transportation; Kenneth Strout, its director of operating practices; Mike Horan, its assistant director; Jean Demaitre, its manager of train operations; and train engineer Thomas Harding. They all face two charges each of failing to ensure the train was properly braked before it was left unattended for the night. Montreal, Maine & Atlantic Canada Co. and MMAR (the railroad company) face the same charges.
The charges stem from breaches of the Railway Safety Act (RSA) and the Fisheries Act, the Canadian government said in a statement. Transport Canada’s investigation under the RSA found that an insufficient number of handbrakes had been applied to the train and that they weren’t tested properly. The Environment Canada’s Fisheries Act investigation dealt with the release of crude oil into the town of Lac-Megantic and the Chaudiere River.
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