PORTLAND, Maine — The trustee for the bankrupt Montreal, Maine and Atlantic Railway said he expects a final agreement on Oct. 5 over a settlement to pay victims of the July 2013 oil train derailment that killed 48 people in Lac-Megantic, Quebec.
Bob Keach, the trustee for the railroad, and attorneys for Canadian Pacific Railway reached a deal during a hearing Thursday that would tweak language in the Chapter 11 bankruptcy plan. Canadian Pacific, in return, would remove its objections and its rights to appeal the bankruptcy plan.
“This is about getting people paid,” Keach said after the hearing Thursday.
He said removing the possibility of an appeal would make certain that settlement fund would not be tied up further in court battles.
Timothy Thornton, the attorney for Canadian Pacific, said the company was motivated by protecting its legal rights and not in blocking a settlement from moving ahead to pay the victims.
Canadian Pacific has denied liability and has not participated in a massive settlement arranged in the two years since the July 2013 derailment that killed 48 people, leveled the downtown of Lac-Megantic and became a flashpoint for regulators in the United States and Canada to issue new safety standards for trains carrying flammable fuels.
Keach said that the bankruptcy estate has made a settlement offer to Canadian Pacific and that discussions are ongoing about it joining the settlement.
For the time being, he and attorneys for Canadian Pacific agreed to tweak a judgment reduction provision in the bankruptcy plan, which specifies how Canadian Pacific could reduce its liability for damages claims settled with other parties, according to Keach. For example, if it were found liable for 30 percent of a claim worth $1 million, the claim would be reduced to $300,000.
After working out changes to the bankruptcy plan with Canadian Pacific, Keach told U.S. Bankruptcy Judge Peter Cary that the parties would seek court approval to amend the plan in Canada and then in the United States.
Cary said Thursday that the agreement moves the case with “tragic underpinnings” toward a conclusion. The bankruptcy plan will come back to the court for approval in a hearing starting at 10 a.m. Oct. 5.
After reaching the agreement, the court threw out a motion from Canadian Pacific seeking to have access to the full, unredacted settlement agreements inked by other parties in the case. Some of the full settlement amounts are available but many remain confidential.
Canadian Pacific is one of 25 defendants facing wrongful death claims and other damages connected with the unattended train that careened into Lac-Megantic in the middle of the night after a conductor did not property set handbrakes for the locomotive.
The settlement fund reached $431 million (Canadian) with a contribution from World Fuel Services Corp. in June.
If the settlement is approved, it would disburse about $111.2 million to people with wrongful death claims in the case and another $48.8 million to those with moral damages or personal injury claims.
The distribution plan in the wrongful death claims of the 48 victims calls for compensation ranging from payments of $478,000, or 0.43 percent of the settlement, to $5.3 million, or 4.8 percent, based on a point system that factors in the age of the victim, the age of surviving children and spouse and other conditions.
The settlement would release the settling parties from future claims.
The parties also on Thursday morning resolved objections from Wheeling & Lake Erie Railway Co. and the New Brunswick Southern Railway Co., by agreeing to set aside a certain amount of settlement funds as they seek to prove a security interest in some of the settlement proceeds.