Montreal, Maine & Atlantic filed for protection from its creditors in Canada and the U.S. yesterday amid a flurry of lawsuits and growing clean-up costs.
MM&A initiated proceedings for Chapter 11 bankruptcy protection in a U.S. court, while its sister firm in Canada presented a petition in Quebec Superior Court in Montreal.
Justice Martin Castonguay said the events in Lac-Mégantic last month were extraordinary and require an extraordinary remedy.
He said he was not impressed with the railways presentation for bankruptcy protection, but in light of the circumstances, there was no alternative but to grant the application.
The town and the Quebec government have sent legal notices to MM&A, demanding that it reimburse Lac-Mégantic almost $8 million in environmental mop-up costs after millions of litres of crude oil were released into the environment.
An unattended MM&A train carrying crude oil roared into Lac-Mégantic and derailed, setting off massive fireballs, destroying dozens of buildings and killing at least 47 people.