08/19/2013 12:47 EDT | Updated 10/19/2013 05:12 EDT

MM&A railway to be sold to pay Lac-Mégantic costs

The head of the railway at the centre of the Lac-Mégantic train crash has welcomed news that it can continue to operate, saying he will be able to raise more cash when he sells the railway's assets.

Edward Burkhardt said the Montreal, Maine & Atlantic Railway needs money to clean up the site of last month's disaster and meet its obligations to creditors, including Lac-Mégantic residents who have sued the railway.

The Canadian Transportation Agency announced late Friday that it would extend MM&A’s certificate of operation until Oct. 1. A decision earlier in the week to suspend its right to operate was reversed because the federal regulator determined that the railway had sufficient liability insurance to operate in the short-term.

Burkhardt said the railway hopes to continue providing freight services in Quebec and the Maritimes.

“Ultimately the railway will be sold for the benefit of the creditors, and it is worth considerably more as a 'going concern' than if it were to be shut down,” he said in an email statement.

“The major creditors are the Province of Quebec and residents of Lac-Mégantic, and achieving the best sale price will be beneficial to them. We will be working with the court appointed monitor and the U.S. Trustee in developing the sale process."

Last week MM&A was granted creditor protection in Canada and bankruptcy protection in the United States.

The rail company faces a criminal investigation, as well as several lawsuits, in connection with the July 6 derailment of train cars carrying crude oil that wiped out part of the Quebec town of Lac-Mégantic and killed 47 people.

As it attempts to resolve its affairs, MM&A will be seeking a buyer for its Canadian operations, which are primarily in New Brunswick and Quebec.

Irving Oil Ltd., which had to reroute its rail shipments of western crude oil to its Saint John refinery following the Lac-Mégantic train derailment, has been suggested as a potential buyer. It is among the defendants in a lawsuit by Lac-Mégantic residents.