By PAUL VIEIRA
OTTAWA -- Canada's transport regulator suspended Tuesday the operating license of the railway involved in a derailment in a small town in Quebec that killed 47 people.
The Canadian Transportation Agency said it revoked the license belonging to Montreal, Maine & Atlantic Railway because of concerns over the company's insurance coverage. The suspension takes effect on Aug. 20.
MM&A filed last week for bankruptcy protection in both the US and Canada, a month after a company train carrying crude oil derailed in Lac Megantic, Quebec, sparking massive explosions and wiping out sections of the town.
The company in court filings said that its obligations had exceeded the value of its assets, and that the company had lost much of its freight business since the derailment.
The agency said it reviewed MM&A's insurance coverage and was "not satisfied" the company had adequately restored coverage to the same level prior to the Lac Megantic derailment in early July.
"This was not a decision made lightly, as it affects the economies of communities along the railway, employees of [MMA], as well as the shippers who depend on rail services. It would not be prudent, given the risks associated with rail operations, to permit [the company] to continue to operate without adequate insurance coverage," said Geoff Hare, the agency's chief executive.
The railway, whose US operations are based in Hermon, Maine, is a subsidiary of Illinois-based train owner Rail World Inc., a company led by railway veteran Edward A. Burkhardt. Mr. Burkhardt didn't immediately respond to a request for comment.
Dow Jones Newswires