The colossal insurance fight over one of Canada’s worst rail disasters could come to an end as Canadian Pacific Railway appears ready to drop its appeal against the $450 million settlement fund for victims.
Lawyers said that, in return, the company is looking for certain legal protections.
A motion has already been filed by the lawyers of the Montreal Maine and Atlantic Railway Ltd. (MMA) to change the conditions of the settlement fund. Now defunct, the MMA was the company held responsible for the July 6, 2013 derailment which killed 47 people in the Quebec city of Lac-Megantic.
If the proposed modifications are accepted by a judge, Canadian Pacific (CP) will withdraw its appeal against the fund both in Canada and the United States.
Andrew Adesskey, the MMA bankruptcy’s court-appointed monitor, said that if the changes pass, victims of the disaster could start getting their portion of the payout before the year is out. However, even though the hearing is scheduled for Thursday, it could get postponed.
Jeff Orenstein, the attorney for the victims, said that the lawyer representing the city of Lac-Megantic has officially asked for a postponement saying that he needs more time to study the motion’s wording. Orenstein added that he might also need time.
“We just got (the motion) and we are studying it,” he said.
According to Orenstein, the motion also shows that CP is willing to drop its appeal. It was the only company to not participate in the fund and had filed an appeal over the summer against a judge’s decision to release the money to victims and creditors.
The companies which had offered to pay were released from legal liability for the accident. CP had objected to the creation of the fund saying that it wasn’t responsible for the derailment and in case it was taken to court by any of the creditors, victims or companies involved, it wouldn’t be able to defend itself properly.
The new motion filed by the MMA will clarify CP’s liability in case it is taken to court, loses, and is asked to pay compensation. Adesskey said that it “clarifies their rights, should someone pursue legal action and succeed in obtaining a judgment against them.”
“This kind of clarifies certain (monetary) reductions that they are entitled to by virtue of how the (settlement) plan functions,” he said.
Martin Cej, a spokesman for CP, said in an email that the company “has always supported the immediate payment of compensation to victims by those responsible for the incident.
“And although CP was not at fault in the derailment... the company has been working with the trustee on a solution that protects CP's interests while allowing compensation to be paid to the victims as soon as possible,” he said.
The rail tragedy occurred on July 6, 2013 when an unmanned MMA train thundered into Lac-Megantic and derailed. Its cargo exploded, which decimated a portion of the downtown core.
Since MMA didn’t have enough insurance to pay damages to the victims of the tragedy and creditors, it filed for bankruptcy in Canada and the U.S. The $450 million settlement fund is tied to legal proceedings in both countries. A Canadian judge has already accepted the fund’s terms and a U.S. judge is set to rule on it on Friday.
Adesskey said that Canadian Pacific was the only party to object to the settlement in either country.
