Auction anticipated for bankrupt railroad responsible for fiery derailment

PORTLAND, Maine – The Maine-based railway involved in last summer’s fiery crash in Lac Megantic, Que., that killed 47 people will go up for auction next week if bidders who met a bankruptcy court’s Friday deadline are deemed qualified.

Two or more bids above and beyond the starting bid were expected for Montreal, Maine and Atlantic Railways, which filed for bankruptcy protection after the crash.

Chapter 11 trustee Robert Keach said he anticipates that there will be enough bids to hold a closed-door auction on Tuesday. But first, his team will spend the weekend making sure the bids pass muster.

“We have to evaluate the bids and confirm that they’re qualifying bids,” he said Friday.

The minimum bid was $15.7 million, which reflected an initial “stalking horse” bid by Railroad Acquisition Holdings LLC. One other bid had been submitted by Friday and others could be coming from among the more than a dozen interested parties.

The goal is to win the best price for creditors while maintaining the rail service, Keach has said. MM&A operates about 770 kilometres of track in Maine, Vermont and Canada.

The sale initially attracted interest from about 20 interested buyers, including three eyeing only a portion of the railway network operating in Canada and the United States. Officials overseeing the sale have said they prefer that the railway system is kept intact to maximize its value

MM&A filed for bankruptcy after an unattended train with 72 oil tankers derailed and exploded after rolling into Lac Megantic last July. About 30 buildings were destroyed in the small community, 15 kilometres north of the Maine border.

The bidding process was being held under a cloak of secrecy. Keach did not identify any of the companies or discuss financial details.

In the end, the winning bidder may not be highest bid. Keach has leeway in determining what’s in the best interest of the public and of creditors.

Proceeds from the company’s sale will be used to repay creditors and victims, supplementing $25 million in insurance payouts available for wrongful death, personal injury, property damage, fire suppression and environmental impact.

Critics say the cleanup alone will exceed $200 million.

— With files from The Canadian Press