Railway in Quebec Explosion That Killed 47 Files for Bankruptcy; Suits Move Forward

PHOTO: Train derailmentPlayRyan Remiorz /Pool/AP Photo
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The lawsuits filed on behalf of the victims in the July 6 train crash that killed 47 people in Lac-Megantic, Quebec, will proceed though the railroad company filed for bankruptcy.

Montreal, Maine and Atlantic Railway Ltd., the company that operated the train that derailed last month, filed for bankruptcy yesterday, a month after the catastrophic crash. The company, which is based in Hermon, Maine, said in a statement that it had filed for protection under Chapter 11 in the U.S. Bankruptcy Court for the District of Maine. The Canadian wing of the company, Montreal, Maine & Atlantic Canada Co., also filed for bankruptcy in Canadian court.

The train was carrying 72 tanks of oil when it derailed and caught fire on last month, evacuating the entire town of Lac-Megantic and destroying over 30 buildings. In addition to the 47 people killed, scores were injured.

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The bankruptcy filings were preceded by lawsuits filed by the Chicago law firm Meyers and Flowers on behalf of the victims in the crash. Peter Flowers, a partner at the firm, said the firm is currently representing 35 victims. Court documents for 12 of the suits show that each victim is suing the company for millions of dollars.

The defendants in the lawsuits included Montreal, Maine and Atlantic Railway Ltd. and its parent company, Railway Inc.

In a statement, Edward Burkhardt, the CEO of Rail World Inc and chairman of the board for the companies that had filed for bankruptcy, said the "obligations of both companies exceed the value of their assets."

According to documents, the company has estimated assets ranging from $50 million to $100 million. Its liabilities were as high as $10 million, not including any suits over the explosion.

But Flowers told ABC News that he thinks the company filed for bankruptcy to avoid responsibility for the crash, because the filing creates more legal loopholes for the litigation.

"They are trying to make it more difficult for people to recover," said Flowers. "It makes it one more hurdle for us to get through but it's not going to change that they will be responsible for the wreck.

"We will take everything they have, if we have to, to compensate our clients," he added. "Whether it's through bankruptcy or not, it doesn't make a difference."

Burkhardt declined to comment beyond the statement, and had previously declined to comment on the lawsuits. At a press conference immediately following the incident last month, he had said the train derailed because an engineer had failed to properly set the brakes, and that the engineer--who was not named--had been suspended without pay.

A hearing is set for today, according to court documents.