PORTLAND, Maine -- The Maine-based railroad responsible for a fiery derailment that killed 47 people in Quebec in July is getting a new name.
The company buying the railroad plans to change the name of Montreal, Maine and Atlantic Railway to Central Maine and Quebec Railway.
Railroad Acquisition Holdings, a subsidiary of New York-based Fortress Investment Group, (FIG - Get Report) had the winning bid for the bankrupt railroad, which owns about 500 miles of track in Maine, Vermont and Canada. The deal is on course to close by the end of next month, said Chapter 11 trustee Robert Keach.
Montreal, Maine and Atlantic Railway filed for bankruptcy after an unattended train with 72 oil tankers derailed and exploded in Lac Megantic, Quebec, in July, destroying 40 buildings, including a busy bar where many of the victims perished. The railroad blamed a worker for failing to set enough brakes, which allowed the train to begin rolling toward the lakeside town of 6,000.
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Most of the $15.85 million in proceeds from the railroad's sale will be used to repay creditors and administration costs. All remaining claims, including wrongful death cases, property damage and environmental cleanup will likely draw from a settlement fund to be set up by defendants, Keach has said.
Central Maine and Quebec Railway will be unencumbered by those problems.
Fortress said in a filing to the Surface Transportation Board this month that it plans to continue operating the line and hopes to recapture business that was lost because of derailment-related disruptions. There are no plans to try to bring back oil shipments, the company said.
It's common for railroad names to change after bankruptcy. The same railroad was known as the Bangor and Aroostook Railroad before a previous bankruptcy, which ended with the rail company's 2003 purchase by Chicago-based Rail World.