World Fuel Services 2015 Annual Report Download - page 22

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Item 3. Legal Proceedings
Lac-Mégantic, Quebec
We, on behalf of DPTS Marketing, LLC (“DPM”), a crude oil marketing joint venture in which we previously owned a 50%
membership interest, purchased crude oil from various producers in the Bakken region of North Dakota. Dakota Petroleum
Transport Solutions, LLC (“DPTS”), a crude oil transloading joint venture in which we also previously owned a 50%
membership interest, arranged for the transloading of the crude oil for DPM into tank cars at its facility in New Town, North
Dakota. We leased the tank cars used in the transloading from a number of third party lessors and subleased these tank
cars to DPM. We, on behalf of DPM, contracted with Canadian Pacific Railway (“CPR”) for the transportation of the tank
cars and the crude oil from New Town, North Dakota to a customer in New Brunswick, Canada. CPR subcontracted a
portion of that route to Montreal, Maine and Atlantic Railway (“MMA”). On July 6, 2013, the freight train operated by MMA
with tank cars carrying approximately 50,000 barrels of crude oil derailed in Lac-Mégantic, Quebec (the “Derailment”). The
Derailment resulted in significant loss of life, damage to the environment from spilled crude oil and extensive property
damage.
Between 2013 and 2015, we, certain of our subsidiaries, DPM and DPTS, along with a number of third parties, were sued
in various actions in both the United States and Canada, by multiple third parties seeking economic, compensatory and
punitive damages allegedly caused by the Derailment. In addition, in 2013, the Quebec Minister for Sustainable
Development, Environment, Wildlife and Parks (the “Minister”) issued an order requiring us to recover the spilled crude oil
caused by the incident and to otherwise fully remediate the impact of the incident on the environment.
On June 8, 2015, we entered into a settlement agreement (the “Settlement Agreement”) with the Trustee (the “Trustee”) for
the U.S. bankruptcy estate of Montreal, Maine & Atlantic Railway, Ltd., Montreal, Maine and Atlantic Canada Co. (“MMAC”),
and the monitor (the “Monitor”) in MMAC’s Canadian bankruptcy (collectively, the “MMA Parties”) resolving all claims arising
out of the Derailment. On December 22, 2015,the effective date of the bankruptcy plans filed by the Trustee in the U.S.
and by MMAC in Canada (the “U.S. Bankruptcy Plan” and the “CCAA Plan” respectively, each a “Plan” and collectively the
“Plans”), the Settlement Agreement became final and effective .
Pursuant to the Settlement Agreement, we contributed US$110 million (the “Settlement Payment”) to a compensation fund
established to compensate parties who suffered losses as a result of the Derailment. As part of the settlement, we also
assigned to the Trustee and MMAC certain claims we have against third parties arising out of the Derailment. The Settlement
Payment, as well as substantially all of the related costs and expenses have been recovered from insurance.
In consideration of the Settlement Payment and the assignment of claims to the Trustee and MMAC, we, as well as our
former joint ventures, DPTS Marketing, LLC and Dakota Petroleum Transport Solutions, LLC and each of their affiliates
(collectively, the “WFS Parties”), received, and will continue to receive, the benefit of the global releases and injunctions set
forth in the Plans. These global releases and injunctions bar all claims which may exist now or in the future against the WFS
Parties arising out of the Derailment, other than criminal claims which by law may not be released. Under the terms of the
Plans and the Settlement Agreement, all actions pending against us were required to be dismissed. Multiple actions have
already been dismissed and we expect all actions currently pending against us to be dismissed in due course.
Other Matters
We are a party to various claims, complaints and proceedings arising in the ordinary course of our business operations
including, but not limited to: (i) commercial and governmental contract claims, such as property damage, demurrage,
personal injury, billing and fuel quality claims, (ii) environmental claims, (iii) bankruptcy preference claims and (iv) tax and
administrative claims. We are not currently a party to any such claim, complaint or proceeding that we expect to have a
material adverse effect on our business or financial condition. However, any adverse resolution of one or more such claims,
complaints or proceedings during a particular reporting period could have a material adverse effect on our consolidated
financial statements or disclosures for that period.
Item 4. Mine Safety Disclosures
Not applicable.