Canadian Lawyer InHouse

It's a small estate with an incredibly sad result. The trick is to try to avoid a lot of fighting that dissipates the pot. Andy Kent, McMillan LLP MMA's secured creditors include: • US$34-million credit facility owed to A the Federal Rail Administration, which holds first priority lien against most of its U.S. and Canadian real estate. About US$27.5-million was owed at the time of filing. • US$6-million line of credit, owed to A Wheeling & Lake Erie Railway Co., is secured against inventory and receivables. MMA's unsecured debt includes US$3.5-million in trade payables. Prior to the explosion, the railroad was grossing US$3-million per month, largely due to an increase in oil shipments. Its U.S. assets have been estimated to be worth US$50- to $100-million. MMA Canada's filings indicate it has $17.9-million in assets. Its secured creditors include the U.S. Federal Rail Administration and RoyNat Inc., for leased equipment. Another potential secured creditor is the Quebec Ministry of Environment, which issued a clean-up order under the Environment Quality Act. Estimates suggest the clean up alone will exceed $200-million. Unsecured creditors, not including any claims stemming from the disaster, exceed $48.1-million, including $43.4-million owed to its parent company and $2.3-million owed to New Brunswick Southern Railway Co., an Irving-owned business. Additionally, CP is owed $915,000. MMA has an insurance policy for 24 • $25-million from XL Insurance Co. Ltd. and a $7.5-million business interruption policy from Travelers Property and Casualty Co. of America Insurance, which is currently disputing the scope of coverage. The company also faces claims stemming from the disaster, including a class action in Quebec and one in the District of Illinois, which was filed within days of the derailment — a testament to the fortitude of American tort lawyers, who were somehow able to quickly identify the families of victims in the largely French-speaking town, during a period of disarray. There are also the clean-up costs — one estimate suggests $200-million — and a host of other derailment claims from local businesses who use the rail to ship goods, all of which exceed the insurance coverage. Judges on both sides of the border quickly granted creditor relief in early August. Needless to say, the Canadian proceeding has drawn a number of Canada's top law firms and bankruptcy lawyers. Among the main players, Gowling Lafleur Henderson LLP is acting for MMA Canada. Osler Hoskin & Harcourt LLP is on for Irving. Fasken Martineau DuMoulin LLP represents CP. Kugler Kandestin LLP/S.E.N.C.R.L represents the U.S. trustee, lawyer Bob Keach. Woods LLP is on for the monitor, Richter Advisory Group Inc. Dentons LLP represents the MMA directors. Borden Ladner Gervais d ec em b er 2013/january2014 INHOUSE LLP is on for the U.S. Federal Railroad Administration. McCarthy Tétrault LLP represents the New Brunswick Southern Railway Co. Ltd. Stikeman Elliott LLP is on for World Fuel Services and Western Petroleum Corp., which was the leaser of the tanker cars that were destroyed. Clyde and Cie Canada S.E.N.C.R.L and Goodmans LLP represent XL Insurance. The cross-border protocols As part of the filings, the courts approved a set of cross-border protocols to facilitate the proceedings. It sets out six objectives, including: • armonize and co-ordinate activities; H • aximize the efficiency of the proceedM ings and reduce costs by avoiding duplication of effort; • onuor the independence and integrity H of the courts; • romote international co-operation and P respect for comity; • acilitate the fair, open, and efficient adF ministration of the estate; and • mplement a framework to address adI ministrative issues. Hubert Sibre, an insolvency lawyer at Davis LLP, says the "value of cross-border agreement is that it facilitates the management of the restructuring, presumably for the benefit of the creditors, since there will be less cost and confusion with respect to the assets."

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