The Montreal, Maine & Atlantic Railway has filed for bankruptcy protection from its creditors (read "victims"). MM&A went Chapter 11 in the U.S. and its Canadian division filed under the Companies' Creditors Arrangement Act.
“It has become apparent that the obligations of both companies now exceed the value of their assets, including prospective insurance recoveries," chairman Edward Burkhardt said in a statement.
Filing for bankruptcy is "the best way to ensure fairness of treatment to all in these tragic circumstances," he said.
So what does this mean for the families and dependents of the deceased, immolated my MM&A in Lac Megantic, Quebec? Probably very little of any good, that's what. The company's assets may be very well secured to either the parent company or its lenders while the victims' families may wind up holding an empty gruel bowl at the end of the line.
Think of it as the Great Commercial CarWash.
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And when additional costs are added to the millions that the municipal, provincial and federal governments have already committed to the cleanup and restoration, the deregulators will rejoice at having achieved one of their most remarkable successes. The consequences of the incident will serve as a perfect complement to the libertarian “Project to Starve-the-Beast”. It’s another “win-win” for the free market!
If Burkhardt really is the scumbucket a lot of people claim him to be, we'll know for sure when he files MMA's re-organization plan.
Canada has a treaty with the U.S. that determines the circumstances in which one assumes priority or jurisdiction in cross-border insolvencies. I'm not sure how that works in the case of Chapter 11 and CCAA filings. There might be some concurrent jurisdiction based on where assets are situated.
There could also be some very interesting "crown priority" issues in this but that usually focuses on conflicting claims of government and secured creditors.
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