07/31/2013 06:48 EDT | Updated 09/30/2013 05:12 EDT

Montreal, Maine & Atlantic responds to Lac-Mégantic lawyer

Insurance delays are hindering Montreal, Maine & Atlantic Railway's ability to pay for the cleanup in Lac-Mégantic, Que., said company chairman Ed Burkhardt.

Burkhardt says he believes insurers will eventually pay, but offered no indication of when money would arrive in the town struggling to deal with the fallout from last month's deadly train derailment and explosions.

Burkhardt said his company responded to a lawyer’s letter asking it to pay for the cleanup operation in Lac-Mégantic — days after a formal lawyer's letter was sent by Lac-Mégantic mayor Colette Roy-Laroche.

In an interview with Radio-Canada, Burkhardt blamed the insurance providers for not being prompt, adding that the company would be paying if it had the resources to do so.

“Our insurer has a legal problem that I’m not in a position to describe, as to when they will commence making payments and in what form those payments will be made,” he said.

Roy-Laroche said last week that a letter of formal notice had been issued and that MM&A did not reply in the 48 hours provided.

Late on Wednesday, Quebec Environment Minister Yves-François Blanchet confirmed in a news release that they'd heard back from Montreal, Maine & Atlantic Canada, Montreal, Maine & Atlantic Railway Ltd., Western Petroleum Company and World Fuel Services.

However, the news release read, the companies did not clearly or firmly promise to abide by the conditions set out in the lawyer's letter.

The clean-up crews hired by MM&A after the July 6 disaster threatened earlier in the month to stop working if they weren’t paid the $4 million owed to them.

Roy-Laroche said yesterday at a news conference that MM&A now owes the town $8 million for the clean-up efforts already conducted by the crews.

She said the town fronted the cost of it in order to keep the process moving.

But when MM&A didn’t refund the town in a prompt manner, the mayor sent the lawyer’s letter asking to be refunded, as well as the company’s assurances that any further costs would be covered by them. MM&A was given 48 hours to respond.

When no response was received, the Quebec government made rare use of its executive powers by ordering the companies behind the Lac-Mégantic disaster to cover the cost of damages linked to the derailment and the ensuing environmental impact.

MM&A layoffs a sign of financial trouble?

Quebec environment minister Blanchet said earlier this week that the railway companies are responsible for all costs relating to recovering the oil from the water and soil, preventing its spread and conducting a study of the environmental impact.

Burkhardt said he believed the insurance company would eventually pay, and that, “with the insurance money, we can obviously carry on this effort for a good long time.”

When questioned as to whether the trouble paying was a symptom of larger financial problems for MM&A, Burkhardt deferred.

“We feel we can continue our operation on a scaled-down version you might say, regardless of the other factors involving the company. Now, whether the company would seek an order in a bankruptcy situation is something we have to consider, but we’ve made no such decision,” he said.

The company laid off 19 of its 75 Quebec workers on July 17. It laid off five more on July 30.