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Railroad in Canada explosion has adequate insurance through Oct. 18

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Railroad in Canada explosion has adequate insurance through Oct. 18

The railroad involved in July's deadly derailment and explosion of a runaway train in Quebec has adequate third-party liability insurance to continue operations until at least Oct. 18, but no decision has been made yet whether to extend that to Jan. 15, 2014, pending more information, a Canadian regulator says.

In August, a Quebec judge permitted the release of $250,000 in funds of the Hermon, Maine-based Montreal, Maine & Atlantic Railway Ltd., which was involved in the derailment that killed 46 people and destroyed much of central Lac-Mégantic, Quebec.

The Ottawa-based Canadian Transportation Agency said that as a result, it was satisfied the railroad had adequate third-party liability insurance coverage for short-term operations

until Oct. 1.

In a statement Thursday, the agency said it is satisfied that the railroad continues to hold adequate third-party liability insurance, including the self-insured portion, for short-term operations until Oct. 18.

However, a Companies' Creditors Arrangement Act court hearing is scheduled Oct. 9 in Sherbrooke, Quebec, “that may have an impact on the agency's consideration of longer-term operations” until mid-January next year, the agency said.

The court is comparable to bankruptcy court in the United States.

The Canadian agency also said it has requested additional information from the railroad and will consider the information before making is final ruling on the request to extend operations to mid-January. It said it will make its decision by Oct. 18.

“I am pleased by the (Canadian Transportation Agency's) action which shows appropriate faith in the operations of MMA and MMA Canada and acknowledges that the level of insurance is appropriate under the circumstances,” Robert J. Keach, a shareholder with law firm Bernstein, Shur, Sawyer & Nelson P.A. in Portland, Me., who has been named the railroad's trustee during its bankruptcy, said in a statement.

Mr. Keach said he is looking forward to working with “all concerned” to get the extension to mid-January “and in light of that anticipated event, toward a sale of the railroad as a going concern, to the benefit of all stakeholders.”