New Brunswick

Rail car agreement spares Moncton jobs for 19 months

A New Brunswick judge accepted a deal on Monday that will allow 14 rail cars to be refurbished in Moncton over the next 19 months, as a part of the former Industrial Rail contract.

Agreement does not call for $20.5M to be repaid to the provincial government

A judge approved an arrangement that will see 14 Via Rail cars refurbished in Moncton. (CBC)

A New Brunswick judge accepted a deal on Monday that will allow 14 rail cars to be refurbished in Moncton over the next 19 months, as a part of the former Industrial Rail Services contract.

The deal will see CAD Railway Industries Inc. act as the project manager and take over portions of the Via Rail agreement.

CAD Railway Industries will take over Industrial Rail's contract and refurbish four rail diesel cars and 10 LRC passenger cars. The manager will have 19 months to complete the project, as outlined in the court documents, starting on Oct. 31.

The provincial government announced earlier this year it was seeking a court-appointed receiver for Industrial Rail Services, saying the company failed to repay it loans.

Industrial Rail had a $109-million contract with Via Rail to refurbish 98 train cars.

An agreement reached on Monday says the company will remain under receivership with Ernst and Young.

The deal will mean 19 months of work in the Moncton-based manufacturing facility.

No recoup provisions for province

But the provincial government, which had backed Industrial Rail's original contracts with $20.5 million in loans and loan guarantees, is likely out of its money.

"There is nothing in today’s agreement that will see the province recoup its money. However, we are pleased to see that the refurbishment of rail cars will recommence soon in Moncton," said Bruce MacFarlane, spokesperson for the Department of Economic Development.

Trouble with Industrial Rail's contracts started earlier this year when the Moncton company fell behind in delivering the refurbished units. Via Rail terminated the uncompleted portion of its contract with Industrial Rail on April 11.

Industrial Rail Services countered in May by filing two lawsuits against Via Rail Canada worth nearly $32 million. The lawsuits alleged that Via had breached the Renaissance contract and acted in bad faith by terminating the contract.

The company announced a series of layoffs in March. Nearly 200 people worked at Industrial Rail.

The Moncton company is a full-service locomotive and passenger railcar facility specializing in equipment repairs, remanufacturing, modifications, and refurbishment.

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