Earlier this month, the Canadian Transportation Agency moved to suspend the operations of Montreal, Maine & Atlantic Railway (MM&A) — citing a lack of funds to cover insurance costs in the event of other rail accidents.
But the CTA said it would reverse the decision if the company could prove by yesterday's deadline that it could afford to pay its insurance premiums.
In a court hearing yesterday,.Quebec Superior Court Justice Martin Castonguay gave his consent to free up $250,000 of the MM&A’s assets, enough to ensure the railway would be able to pay the insurance deductible in the case of another accident.
Castonguay said that suspending the railway’s operations would be to the detriment of its creditors and the municipalities whose economies rely on the railway.
The MM&A has about 60 clients in Canada, according to court documents filed by the MM&A’s lawyers.
In his decision, Castonguay said that “in an ideal world” the company’s executives would “dig into their own pockets” in order to cover some of the costs associated with the July 6 tragedy in Lac-Mégantic.
When asked by reporters for his reaction to the judge's suggestion, MM&A's president and CEO, Robert Grindrod, brushed them off — saying he didn't know what the judge had said as he doesn't understand French.
Before the railway company's authorization to operate expires in October, MM&A executives will be searching for a new buyer to take over the company's services.
J.D. Irving Ltd. has shown interest in acquiring the MM&A, which would be a strategic addition to its railway branch – the New Brunswick Railway.
The MM&A filed for bankruptcy protection in both the United States and Canada on Aug. 7.
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