World Fuel Services 2015 Annual Report Download - page 75

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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.
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.
Substantially all of the liabilities incurred in connection with the incident have been recovered from insurance through
December 31, 2015. As of December 31, 2015, the remaining outstanding amounts are not significant.
Other Matters
In connection with a theft of fuel product valued at approximately $18.0 million, we recorded an insurance receivable for the
full amount of the loss, which is included in other current assets in the accompanying consolidated balance sheet. On July
31, 2014, our insurer, AGCS Marine Insurance Company (“AGCS”), filed a declaratory judgment action against us in the
United States District Court for the Southern District of New York seeking a court ruling that the loss is not covered under
our policy. During the quarter ended December 31, 2014, we filed an answer to the AGCS complaint and counterclaims
against AGCS for declaratory judgment and breach of contract seeking a court ruling that the loss is covered under the
policy, an award of damages equal to the full amount of our loss plus interest, as well as fees and costs. We and AGCS
have filed cross-motions for summary judgment and both motions are set for hearing in March 2016. No trial date has been
set. We believe AGCS’ position is without merit and we intend to vigorously pursue our rights. However, due to the
complexities and uncertainties inherent in litigation, we can provide no assurance that we will recover the full amount of the
loss.
We are a party to various claims, complaints and proceedings arising in the ordinary course of our business including, but
not limited to, environmental claims, commercial and governmental contract claims, such as property damage, demurrage,
personal injury, billing and fuel quality claims, as well as bankruptcy preference claims and tax and administrative claims.
We have established loss provisions for these ordinary course claims as well as other matters in which losses are probable
and can be reasonably estimated. As of December 30, 2015, we had recorded certain reserves which were not significant.
For those matters where a reserve has not been established and for which we believe a loss is reasonably possible, as well
as for matters where a reserve has been recorded but for which an exposure to loss in excess of the amount accrued is
reasonably possible, we believe that such losses will not have a material adverse effect on our consolidated financial
statements. However, any adverse resolution of one or more such claims, complaints or proceedings during a particular
period could have a material adverse effect on our consolidated financial statements or disclosures for that period.
Our estimates regarding potential losses and materiality are based on our judgment and assessment of the claims utilizing
currently available information. Although we will continue to reassess our reserves and estimates based on future
developments, our objective assessment of the legal merits of such claims may not always be predictive of the outcome
and actual results may vary from our current estimates.