Parties take step toward settlement fund for victims of oil train disaster in Canada

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PORTLAND, Maine — Parties involved in a proposed $200 million settlement fund for victims of a fiery train disaster that killed 47 people asked a Canadian judge Friday to give them until September to pin down the details.

The court filing in Sherbrooke, Quebec, described for the first time how money from the settlement fund could be distributed to victims of an oil train derailment in July 2013 in Lac Megantic, Quebec. A similar filing of a draft settlement plan will be made later in a companion case in U.S. courts.

"This is the first step in implementing the settlement fund," said Robert Keach, court-appointed trustee in the defunct railroad's bankruptcy case in Maine.

Keach said he's received commitments of about $200 million but hopes it will grow to $500 million. Several of the largest corporations with potential legal liability have not yet agreed to participate, he said.

Under the draft plan, wrongful death claims would receive at least 24 percent of the pool but that rate could rise under a reallocation of the government's share, Keach said. In actual figures, that would amount to $57 million to $58 million for wrongful death claims from the existing $200 million, he said. But the formula could change before the final plan is approved by courts in Canada and in the U.S., Keach added.

Much of downtown Lac Megantic was destroyed by a raging fire caused when an unattended train with 72 oil tankers derailed in the middle of the night. More than 60 tankers derailed and several exploded.

The Maine-based railroad, Montreal, Maine & Atlantic, filed for bankruptcy after the disaster and was sold for $15.85 million, virtually all of which went to repay creditors.

Now the focus has shifted to providing for the victims. The draft settlement fund proposed Friday reflected months of negotiations among the victims of various types, including wrongful death claimants, personal injury victims, property damage claimants and government entities, officials said.

Parties hope that the first payments can be made this summer from the existing pool of money.

"Assuming that the plan gets approved, the goal would be to get this distributed as soon as the plan is approved for our client so that they can attempt to move on with their lives as best as they can," said Peter Flowers, a Chicago attorney who's representing families of 41 of the 47 victims.

The filing identified three major parties that have declined to participate in the settlement: World Fuel Services Corp., which owned the oil shipment; Canadian Pacific Railroad; and Irving Oil Ltd.

A year ago, Keach sued World Fuel Services and several other companies, accusing them of downplaying the volatility of the crude from North Dakota's Bakken shale region. The crude was roughly as flammable as gasoline, Canada's transportation agency concluded. That lawsuit is proceeding even as Keach attempts to get the parties to contribute to the settlement.

The companies that choose not to contribute to the fund could be sued individually.

For now, the lawsuits are on hold pending the outcome of the settlement.

The railroad's new owner, Central Maine and Quebec Railway, has resumed shipments of goods, such as propane and chemicals. The company has agreed not to ship crude oil through Lac Megantic until 2016, company officials said.


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