On Sept. 9, Big Shoulders Capital LLC, filed a motion in U.S. District Court in Northern Illinois to appoint Novo Advisors as the receiver for Colorado’s San Luis & Rio Grande Railroad Inc. and Oregon’s Mt. Hood Railroad Co. A company or property is placed in receivership to protect the assets of an organization when it cannot meet its financial obligations or enters bankruptcy.
The court granted receiver appointment the same day Big Shoulders Capital filed its motion. According to court filings, the owner of the two railroads consented to the properties being put into receivership.
Iowa Pacific acquired the San Luis & Rio Grande in 2005 and Mt. Hood in 2008. Both railroads offer freight and excursion services.
In a statement to Trains News Wire, Iowa Pacific President Ed Ellis writes that the move “was necessary to continue funding with our lenders.”
Ellis adds that both railroads will continue to operate as normal while in receivership.
According to court records, in 2017 the railroads took a $5 million loan from Big Shoulders Capital, an Illinois-based investment firm. The railroads have since defaulted on the loan and currently owe the investment firm more than $4.6 million.
Court documents state the railroads are also subject to “substantial claims” by the Internal Revenue Service.
“The appointment of a receiver is necessary in this case because Defendants are unable either to satisfactorily operate and manage their businesses or to maintain and preserve their assets,” attorneys for the investment firm write.
Court documents note that the Surface Transportation Board has been notified that the railroads are being placed into receivership and that it has no objections, noting that it expects the railroads to “continue to operate and serve the public.”
So, what is the latest and greatest on this bankruptcy? I was looking at Ozark Mountain Rail cars website and noticed that the Mt. Hood RR’s GP38 and one of the GP9’s was sold (2/11/20).
Dissappointing that so many rush to pass judgement without that knowledge to do so.
Bob Withorn
Ed Ellis hasn’t been able to run a successful railroad since leaving Amtrak. Every property has had capital lost to playing passenger trains. As a 27 year railroader in both operations and locomotive departments I have seen many folks like him. I can’t wrap my head around how people trust him and others like him.
Mr Ellis’ first name was not mentioned in the article.
Smoke and mirrors only get you so far…
This should not come as a surprise to anyone who has had dealings with the ‘Ellis Empire’.
With short lines changing hands at such a premium these days, its hard to see anything go to naught at the moment.
And the Iowa Pacific story nears the end…
I would assume the rail lines themselves will be fine if their is sufficient freight traffic to sustain operations and minimum track maintenance.
However, have no knowledge and maybe someone who does can chime in on the specific rail lines themselves instead of the above article that is on the finances of a loan/or investment taken out against the rail lines.
George Greenbaum,
Both the Mt. Hood Railroad and San Luis & Rio Grands are successful, the loan default has nothing to do with them being unsuccessful, it’s what happens when you use successful properties as collateral for a loan to prop up unsuccessful properties. Might also point out the Saratoga operation was also successful, but never promise more than you can bite off and chew.
Thanks Mr. Rowland for your praise of Mr. Ellis. High praise from such an innovator as yourself.
I was lucky enough to ride Pullman Travel myself and had a wonderful time. However given the travel load I had no idea how it could be successful. I remember reading the Trains article about a decade ago concerning how many passenger cars– and especially dome cars– his Iowa Pacific owned, I was immediately was concerned about what would happen to them if his operations were not a success– a high likelihood given the passenger train business and the “Trains Magazine” curse. Given Amtrak’s even worse attitude about private varnish. I hope they do not end up as scrap. More importantly I feel for the employees and communities where these operations are.
We should all mourn this as Ed Ellis has been the rare major league risk taker in the tourist railroad industry and deserves our thanks for trying innovative ideas like Pullman Travel against all odds.
I for one admire his daring and hope he’ll survive to try again.
Ross Rowland