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The rail operator whose tanker train blew up in a Quebec town last month, killing 47 people, will be shut down because the firm does not have enough insurance to pay clean-up costs and other damages.
The Canadian transport regulator says it has ordered Montreal, Maine and Atlantic Railway's (MMA) local subsidiary to begin shutting down its operations a week after the company filed for bankruptcy protection.
The closure comes as a result of that application revealing that MMA's insurance only covered liabilities of up to $27.6 million.
The repairs and clean-up of the July 6 derailment, which destroyed parts of the town of Lac Megantic, are expected to cost more than $223 million.
The Canadian transportation agency - an independent government body that oversees railway insurance - said it had contacted MMA and its Canadian subsidiary to ensure they continued to hold adequate third-party liability insurance.
But the agency was not satisfied with the response, said Geoff Hare, CTA's chief executive officer.
"It would not be prudent, given the risks associated with rail operations, to permit MMA and MMAC to continue to operate without adequate insurance coverage," Mr Hare said in a statement.
MMA also faces a series of class-action lawsuits in Quebec and in the United States on behalf of the victims, as well as a notice of claim from a firm that is unable to ship from its Lac-Megantic production facilities.
A spokeswoman for MMA chairman Ed Burkhardt said he was unaware of the agency's move.
An estimated 5.6 million litres of oil were spilled in the crash, which was the worst of its kind in North America in two decades.
It happened when the train started moving after it had been parked for the night a few kilometres outside Lac-Megantic.
Mr Burkhardt said last month he doubted whether the engineer had set enough handbrakes after parking the train.
This article first appeared on www.abc.net.au
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