Canadian Underwriter

Delay in approval of settlement fund for victims of Lac-Mgantic rail disaster

September 25, 2015   by Canadian Underwriter

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PORTLAND, Maine – Final approval of a massive settlement for victims of the 2013 train derailment in Lac-Megantic, Que., has been delayed.

Smoke rises from railway cars that were carrying crude oil after derailing in downtown Lac-Mégantic, Que., Saturday, July 6, 2013. Quebec Superior Court justice will begin hearing arguments Monday that could determine whether more than $431 million can be distributed to victims and creditors of the Lac-Mégantic, Que., train derailment or if the entire settlement process will come to a screeching halt. THE CANADIAN PRESS/Paul Chiasson

The delay is to provide time for the only party that’s opposed to the fund to either join in the settlement or negotiate terms to withdraw its objection.

A U.S. bankruptcy judge ordered the parties Thursday to reconvene Oct. 5, and Robert Keach, the court-appointed monitor for Montreal Maine and Atlantic Railway’s bankruptcy proceedings in the United States, is confident the settlement will be confirmed.

MMA is the railway that was at the heart of the disaster that killed 47 people when a runaway train with 72 oil tankers derailed on July 6, 2013 and wiped out much of downtown Lac-Megantic.

Related: CP Rail to seek leave to appeal ruling tied to Lac-Mégantic settlement fund

Keach said the settlement was worth $450 million as of Wednesday but that the figure would fluctuate over the next few weeks.

The agreement was the issue of negotiations with about two dozen companies.

The only party with potential liability that declined to participate is Canadian Pacific, which contends it wasn’t treated fairly under the deal.

Related: Canadian Pacific challenging responsibility in Lac-Mégantic disaster in court

At a court hearing in Canada earlier this year, a lawyer for CP said the disaster did not involve the company’s tracks, rail cars, products or employees.

MMA, train driver Tom Harding, railway traffic controller Richard Labrie and Jean Demaitre, the manager of train operations, have all been charged with 47 counts of criminal negligence causing death.

Harding’s lawyer has said he doesn’t expect a trial to begin before the fall of 2016.

Related: U.S. company announces settlement agreement in Lac-Mégantic, Que. train derailment

The case is proceeding under a preferred indictment, with no preliminary hearing.

A charge of criminal negligence carries a maximum sentence of life in prison upon conviction.

The charges were laid in May 2014 following a Quebec provincial police investigation into the derailment.