BANGOR, Maine — A federal judge Wednesday approved a set of cross-border protocols that will allow coordination of the separate bankruptcy cases filed by the Montreal, Maine and Atlantic Railway in Canada and the United States.

A Canadian judge was scheduled Wednesday to consider a motion to adopt the protocols.

U.S. Bankruptcy Judge Louis Kornreich also granted motions that will allow the Hermon-based railroad to continue operating and paying employees’ salaries and benefits using a $6 million line of credit provided by Wheeling & Lake Erie Railway Co., based in Ohio.

MMA filed for Chapter 11 bankruptcy in U.S. Bankruptcy Court in Bangor and in Canada on Aug. 7, a month after one of its trains rolled driverless down a hill before derailing in the middle of the town of Lac-Megantic, causing a fiery explosion that killed 47 people.

Robert Keach, a Portland lawyer who was appointed Aug. 22 to serve as trustee during the bankruptcy proceeding, told Kornreich that he has been working the past several weeks to stabilize the railroad’s finances in order “to pave the way for a sale process” even though a buyer has not been found.

Keach and others have said that to emerge from bankruptcy, the company eventually will have to be sold. The trustee also told the judge that he expected financing to cover the administrative costs of the bankruptcy and the operational cost of the railroad as the bankruptcy moves through court would be in place before the next hearing scheduled on Sept. 13.

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The return of rail service to Lac-Megantic, which is expected by the end of the year, could help stabilize the railroad’s finances.

Quebec Premier Pauline Marios on Tuesday announced a plan to rebuild the destroyed town’s center and create a new commercial center, according to information posted on the Railway Track and Structures website. The temporary rail line would be built from MMA’s main line to the town’s industrial park. The province is expected to continue studying where a permanent rail line should be constructed, the premier said.

Marois made the announcement while outlining a $15.3 million plan to rebuild the town’s core and create a new commercial center. The cost of the plan is included in a $56.9 million recovery fund that was announced previously, the website said.

The plan would create a new shopping center, construct a permanent bridge over the Chaudiere River and create a memorial for the victims.

For the next month at least, the railroad may continue to operate in Canada. The Canadian Transportation Agency on Aug. 23 allowed MMA and its Canadian subsidiary to keep trains running through Oct. 1. Ten days earlier, it had ordered MMA to cease operations, saying the railway lacked adequate insurance, according to a previously published report.

The insurance that MMA had in force in July will not come close to meeting the costs of cleanup and restoration after the Lac-Megantic crash, according to a previously published report. The CTA reversed last month’s order, allowing MMA to operate through Oct. 1 after the railway provided evidence of adequate third-party insurance.

Rail World Inc., MMA’s parent company, purchased the Bangor and Aroostook Railroad in 2002 for $50 million as part of Bangor and Aroostook’s Chapter 11 bankruptcy proceedings, according to a previously published report.

In its bankruptcy filing, MMA estimated that its debts totaled about $3.5 million before the accident. That figure excludes the $27.5 million the railroad still owes on a $35 million loan it received from the Federal Rail Administration in 2005.

MMA listed between 200 and 999 creditors in its bankruptcy filing. The railway estimated its assets at between $50 million and $100 million and its liabilities between $1 million and $10 million.


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