August 08, 2013
Partner David Bish, a lawyer in Torys’ Restructuring and Insolvency practice, commented in a Globe and Mail article on the legal and financial complexities of the Lac-Mégantic disaster cleanup.
Below is an excerpt of the article.
The Quebec government says it can jump to the front of the line of the Montréal, Maine & Atlantic railway creditors seeking millions, to compensate the Lac-Mégantic derailment victims and cover its cleanup bill. But legal experts aren’t so sure.
Quebec is counting on the environmental provisions of the federal Companies’ Creditors Arrangement Act to get repaid by the Canadian subsidiary of MM&A, which listed $48-million in liabilities but only $18-million in assets in its bankruptcy filing. However, that recourse may not be as far-reaching as the government suggested.
. . .the conditions under which Quebec would get priority over other claimants are narrowly defined by the creditors’ arrangement act. The government can only claim a privileged status on the land and property where the environmental disaster occurred, explained two other insolvency experts.
“Even if the railway owns vast assets somewhere else, but that is not where the disaster happened, then the government doesn’t get priority over those. It can only lay claims on the property at the centre of the environmental cleanup,” said David Bish, a partner at Torys LLP.
Also, the contaminated land or buildings must be owned by the company that sought bankruptcy protection. In Lac-Mégantic, that doesn’t leave much; only the tracks and the land under it are listed as part of the railway’s Canadian assets. Quebec disagrees. “That will have to be debated,” said Joanne Marceau, spokesperson for the Minister of Justice.
For the full article, click here.