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Montreal, Maine & Atlantic files bankruptcy
Burkhart is rightfully protecting the assets of MM&A, and thereby whatever jobs that might be left after the smoke clears (no pun intended). His personal assets are already protected, as they should, and deserve to, be. What remains to be seen is what, if any, new management structure will be put into place. There are many well-run short lines in the US and Canada, and not on a shoestring budget such as MM&A appears to have been. Hopefully, he (or the courts) will install a recognized industry leader to straighten out the mess, or turn the whole property over to another competent operator.
Preemptive bankruptcy in the court of last resort doesn’t close this awful saga as it will continue in the months ahead. This snowball rolling downhill has not lost any momentum, and the total effect of this disaster are still waiting in the wings far beyond simply what is now shell of the MM&A.
It strikes me that nothing is recoverable, the incinerated citizens, the destroyed reputation of the road, the lost livelihoods. Other roads will be paying a price as well in terms of further regulatory mandates. It’s like a stain that cannot be washed out.
I might add to my previous comment – it has always amazed me that there are some people who simply can’t figure out that if the money isn’t there, it isn’t there – no matter how loud one screams.
No surprise. The company was, I’m quite sure, carrying the usual liability insurance. It is, in fact, quite likely that that insurance would have been adequate to pay for the actual damages, both to the railroad property and to the town. However, in a disaster of this sort it is pretty well guaranteed that, as we have seen, very large lawsuits will be filed – well in excess of any actual damages, and well in excess of whatever insurance might be available. This is true of any company, however large or small.
The objective of a Chapter 11 bankruptcy (and the equivalent Quebec action) is to allow a company to reorganise under new management, and return to operation as a viable enterprise. I think that the folks served by the railroad here would like that to happen. It won’t necessarily make the ambulance chasing lawyers happy, nor those seeking vengeance – but it would keep the railroad operating. The other alternative is to is a Chapter 7 bankruptcy, in which the salable assets of the company are sold off, usually at auction, and the proceeds are distributed by a judge amongst the creditors. If the debts – in this case the potential and actual lawsuits – are significantly larger than the value of the salable assets, everybody loses.
“JAMES C HALL from CONNECTICUT said:
I might add to my previous comment – it has always amazed me that there are some people who simply can’t figure out that if the money isn’t there, it isn’t there – no matter how loud one screams.”
I believe you will find those screaming the loudest are usually the same ones who never had a grasp of the concept of economics. Probably because it was never taught to them either in the socialist run school or by their parents. But I do get the impression they believe all businesses are rich, no matter what happens. And if a business runs low on money, no problem, fire up the printing press and make more to become rich again. Therefore, scream and throw tantrums like little kids until the stack of money exists again. Make sense?
@Roger Dickinson : while I totally agree that the MMA cast a black mark on the RR industry, I still don’t understand why people keep blaming the DOT-111 cars for what happened in Lac Mégantic. The train had gained so much energy going down that hill that any tank car would have ruptured and burned. Same issue about track conditions: they were bad alright, but this factor was not an issue in Lac Mégantic. In fact, had the track been so badly damaged, the train would have derailed before it got to that 10mph curve.
The fallout travels far. A regional in my area has a customer whose link to a major vendor is severed until line in Canada is open.
I understand their insurer denied coverage
This is not a shock at all. I think the gravity of this kind of disaster could bankrupt any railroad. It will be interesting to see what will end up happening to the MM&A in the end.
Property tax savings by government ownership of right-of-way.
Property tax savings by government ownership of right-of-way.
While this is a Chapter 11, unless the money’s there (and the statements from “Ed” suggest they’re not - FWIW, the filing shows the railroad has only $100M in assets) it’ll almost certainly lead to a dissolution of the company itself and a sell off of the assets.
So… worst case, a railroad that appears to be uneconomic goes under. A tragedy, but something inevitable in business. Arguably if the only way to run this system was with one man crews and a laissez faire attitude towards safety, then perhaps it was never economic to begin with.
More positively, the main line may be taken over by a company that’s better at running this kind of thing, be it one of the companies that specializes in running short lines (though the MM&A is bigger than the FEC or Alaska Railroad, it’s not really a short line except in performance) or an experienced Class 1.
Not the railroad industry’s finest hour. If the MM&A disappears, few tears should be wept at this point.
Just disgusting…
Just disgusting…
There should be a certain amount of insurance any company must carry when hazmat materials are involved. That said I’m sure MM&A was handling the oil trains to get a piece of the oil boom pie. What happens is what happen, a underinsured company playing out of its league!
Well, at least ol’ Ed is protecting himself…as usual.
This tragedy is a massive black mark on the entire railroad industry. Hauling unit trains of crude oil and ethanol have been treated as “business as usual”. The DOT-111 tank car is an outdated design being used to haul incredibly hazardous and environmentally damaging substances.
I only hope railroads wake up before it’s too late. Another tragedy like this and railroads might as well close up shop.
To those who are seemingly so critical of damage or compensatory awards in an avoidable tragedy like this: if your twenty-something daughter was in the bar that was incinerated, what would you value her life at? Would you really worry about economics and insolvencies? I doubt it. If this indeed turns out to find MMA to be culpable, then they have a responsibility to the people and the community. Don’t let your extreme politics cloud your humanity.
The question that needs to be asked is: how do you get blood out of stone?