Years ago I worked for a shortlines that declared bankruptcy minutes before the sheriff's auction. They themselves weren't bankrupt, but were the only real assets of the parent company who had a judgement against them by BNSF over a defunct operation whose failure was a direct result of the last Chrysler debacle (two assembly plants they were contracted to switch permanently closed.)
According to STB rules of abandonment, to make an offer of financial assistance to purchase a property approved for abandonment, if the purchase price is contested by the seller or buyer, the STB will set the sale price at the net salvage value (salvage the track material and sell the property off, less costs).
The railroad I worked for was sold by the bankruptcy trustee for far less than salvage value, leaving the creditors shorted and owner with nothing. The next local owner ran it for a while, then sold it to a group that ran it until ceasing operations. Despite the bargain price from the bankruptcy court, the current owners have set a high price for a local shipper's group interested in reopening it.
Anyone buying the SLRG will be faced with the responsibility of continuing operations as a common carrier, until such time that might choose to abandon it if they can prove there's insufficient demand or revenue to cover continued operations. Should the current shippers believe any potential buyer is just trying to make a buck on scrapping it, they can protest the sale to the STB.
It's a sticky situation. The bankruptcy trustee may have an issue abandoning it themselves (since there are active shippers), they would be unlikely to want to invest in continuing operations especially if there is already a loss, but they may not be able to offer it as a bargain or delay the sale any longer due to pressure from the creditors.
Honestly, the best bet is for a regional rail authority to be formed with state support and obtain it in the name of preserving transportation infrastructure and supporting local economic development.
Edit - I sincerely doubt anyone will accept any outstanding liabilities unless they are limited and clearly defined. Any sale will be likely limited to assets only. Certain environmental issues are not required to be addressed as long as it is still a railroad, otherwise they have to be remediated.
Edited 1 time(s). Last edit at 06/14/2022 08:14PM by Dan Robirds.
