What's next for MMA?

[MEC407]

From the Bangor Daily News:

State officials are talking to four Maine rail haulers about running Montreal, Maine and Atlantic Railway operations should the company seek bankruptcy protection in response to its runaway train destroying the center of a Quebec town earlier this month.

The idea is to protect Maine businesses that use MMA as an artery for supplies and products, Nate Moulton, director of the state’s industrial rail access program for the Maine Department of Transportation, said Tuesday.

Read more at: http://bangordailynews.com/2013/07/30/n ... lway-fold/" onclick="window.open(this.href);return false;

[BandA]

the mayor is on record stating that the railroad must have a new route away from his town . can't return to the present trackage.

How long does it take for the gov't of Quebec to build a bypass? I'll bet they will have to use the current alignment at least temporarily, although they'd best not carry hazardous cargo through that town.

the railroad wasn't paying the spill cleanup people that they hired.

that's the lever to force bankruptcy if that's what they want to do

there have been filings in illinois going against the parent company. the 20 shareholders are exposed since llc doesn't shield where crimninal acts are in play.

If they can't prove criminal negligence, the assets of the parent company and the assets of the US side should be clear? Betcha there will be a settlement on the criminal charges, unless there are memos about safety violations that management knew about and wasn't addressing, or they told the engineer he could skip the brake tests, or disgruntled employees willing to testify. I am not a lawyer nor a railroader.

[Backshophoss]

This is not the first time Mr Burkhardt has a major disaster,he was at Wisconsin Central when that RR had a
Haz-Mat involved wreck in Wisconsin,the WC recovered after that, but Burkhardt was Forced Out of the Company.
If Mr Norman is correct,all the Rail World operations in North America will follow MMA into bankruptcy proceedings
to protect themselves from the MMA fallout.
There might be a major "rethink" of 1 man ops and the handling of Haz-Mat trains down the road sooner than later,
this will over time affect all transportation modes.

[MEC407]

News video from WCSH-6: Rail closure in Lac-Mégantic having impact on Maine businesses

[CN9634]

Ruht-Rhow -- http://www.610cktb.com/news/local/story.aspx?ID=2016111" onclick="window.open(this.href);return false;

[MEC407]

Ruht-rhow indeed. :-\

Some quotes from the article...

The Montreal, Maine and Atlantic Railway says it can't pay the cleanup costs for the July 6th fatal derailment in Lac-Megantic.

The railway's chairman says the company is now depending on its insurers to start cutting cheques.

And Ed Burkhardt has raised doubts publicly on whether the company will even survive.
. . .
Meanwhile, A Quebec law professor strongly doubts M-M-A Railway has enough
insurance to absorb the cost of this month's deadly train disaster in Lac-Megantic.

Daniel Gardner believes the derailment could actually have more financial consequences than any other land disaster in North American history.

He suspects the disaster's total costs, between environmental cleanup and lawsuits, will be closer to one-billion dollars.

He'd be surprised if the railway has half that in coverage and will likely go under.

Read more at the link above

[Ridgefielder]

Ruht-rhow indeed. :-\

Some quotes from the article...

The Montreal, Maine and Atlantic Railway says it can't pay the cleanup costs for the July 6th fatal derailment in Lac-Megantic.

The railway's chairman says the company is now depending on its insurers to start cutting cheques.

And Ed Burkhardt has raised doubts publicly on whether the company will even survive.
. . .
Meanwhile, A Quebec law professor strongly doubts M-M-A Railway has enough
insurance to absorb the cost of this month's deadly train disaster in Lac-Megantic.

Daniel Gardner believes the derailment could actually have more financial consequences than any other land disaster in North American history.

He suspects the disaster's total costs, between environmental cleanup and lawsuits, will be closer to one-billion dollars.

He'd be surprised if the railway has half that in coverage and will likely go under.

Read more at the link above

The most expensive land disaster in North American history cost less than a billion dollars? That seems surprisingly low-- although I guess the Black Tom explosion in 1916, the 1917 Halifax Explosion and the 1947 Texas City disaster all involved ships.

[mwhite]

The most expensive land disaster in North American history cost less than a billion dollars? That seems surprisingly low-- although I guess the Black Tom explosion in 1916, the 1917 Halifax Explosion and the 1947 Texas City disaster all involved ships.

That struck me as odd too! Maybe they aren't accounting for inflation. It drives me nuts when news reports fail to adjust to current dollars so that you get a legitimate comparison. Movie takes are routinely compared incorrectly such that "whatever this summer's blockbuster is" is so much bigger than say, Wizard of Oz or Gone With The Wind.

The great Molasses Flood of 1919 in Boston comes to mind for land disasters.

[KEN PATRICK]

a billion? not likely. there are people death limits of $50k absent pain & suffering. these were suddent deaths so the lower limit would be applied. sad but true. 20 railcars @ $100k each. property damage? nothing of significant historical value. loss of business? small seasonal lake side town. probably in the small millions range. but what is really troubling is that this railroad had one of the london insurers who, from experience, never covers the up front dollars. the so-called 'clubs' are great on paper but restrictive on cash flow. i'm sure mm&a has a significant first dollar requirement. no other will be 'cutting checks' soon. mm&A is the first in and obviously has no cash. the folk in megantic will cover the clean-up. ken patrick

[JimBoylan]

Make that 62 burnt tank cars they don't own. It was a 73 car train with 1 buffer car, that didn't burn. 9 cars were pulled away from the rear of the train, and the next car, left behind, doesn't seem to be damaged.
The real bottomless money pit will be environmental cleanup, especially as the railroad has not taken control of it.

[JimBoylan]

While my railroad duties included reading insurance policies to find the "catches", they weren't in the Dominion of Canada, so my findings may not apply there.
Often, the insurance doesn't pay for the 1st few dollars of the loss (the Deductible or Self Insured Retention). Usually, this must be paid by the railroad before the insurance company will pay anything. Sometimes, the insurance company is only obligated to reimburse what the railroad is found liable for and has paid in a judgement after a court case. But 1st, the railroad has to put out money. Payments made ahead of time in hopes of preventing litigation may not be covered. It's all in how the "fine print" is written in the insurance company's favor.

[Zeke]

When I worked for Amtrak we would get quite a few brass hats on the head end. One fellow an Amtrak VP of some department was very friendly and one trip he mentioned he had worked for the Chicago and North Western. This was around 1990 and the WC was enjoying great acclaim. Mr. Burkhardts name came up, this guy knew him well and said two things I recall. Ed was a good railroader but impossible to work for and his usual approach on company matters was ....Ready...Fire ...Aim !

My two cents says Big Ed's shoestring railroad is probably toast. The Canadians are gonna dig hard on the paperwork regarding loco inspection and repair, hours of service records, track inspection records and I suspect some serious fast and loose pencil whipping will be uncovered. The political fallout will be interesting. On the one hand the feds won't want to kill off all of the small town shippers and fragile local economies yet the public wants heads rolling. Can you blame them ? If my family was " Vaporized" by the MMA's ineptitude I would be out for blood too.

CP is now under the whip hand of ex CN CEO Hunter Harrison. He is making no bones that CP is on the prowl to acquire more short lines. He knows the Canadian rail scene like the back of his hand and I wonder if he could grab the MMA at bargain basement price, might he go for it and put the CP back in the Maritimes ? It seems the MMA has a hell of single car business, as every siding appears to have a car in it. That is something Class ones are not interested in, due to low profit margins. Does Irving's one refinery support enough oil traffic to justify the CP pumping 150-200 million dollars to get the MMA in Class one shape ? Amazing what one train wreck can do !

[roberttosh]

CP wouldn't be back in the Maritimes as they would still have to interchange with the NBSR to reach Saint John and in addition, they would now have to compete directly with Pan Am in and out of New Brunswick which wasn't the case when they owned the entire line back in the 90's. Unless the Oil business is long term with growth potential I can't see them being interested, especially with the announcement the other day that TransCanada is building a pipeline from Western Canada right to Irving at Saint John. Remember, MMA was barely hanging on with one man crews and low wages, so just can't see how CP could turn a profit.

[gokeefe]

Remember, MMA was barely hanging on with one man crews and low wages, so just can't see how CP could turn a profit.

That was before the oil trains. If they were to resume it seems as though the line would be viable.

[Zeke]

Might the CP acquire the NBSR also ? As of July 23 the CP reported 252 million net earnings for the past quarter and an operating ratio of 71.9 % both record setting numbers. Im not trying to play devils advocate but Hunter Harrison is one hell of a railroad CEO and is prowling for short lines and a few more big quarters will be sitting on a billion in cash. My belief is he is going to turn the CP into a powerhouse and you do that with growth. I could be wrong, but I think he's looking over the MMA with a beady eye and if the financial stars align he will pounce.