CHICAGO — Nearly two dozen entities associated with Iowa Pacific Holdings were placed into receivership last week as the depth of the company’s financial troubles continues to spill into public view.
Last month, one of Iowa Pacific’s creditors, Big Shoulders Capital LLC, filed a motion in U.S. District Court in Northern Illinois to place Iowa Pacific railroads in Colorado and Oregon into receivership after the railroads failed to make loan payments [See “San Luis & Rio Grande, Mount Hood Railroad placed into receivership,” Trains News Wire, Sept. 13, 2019]. According to court records, Iowa Pacific and its associated companies owe Big Shoulders more than $4.6 million.
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.
Soon after Novo Advisors was appointed receiver of the two railroads, it filed a motion to place more of the company’s properties into bankruptcy protection. [See “Hearing set to place other Iowa Pacific railroads into receivership,” Trains News Wire, Spet. 23, 2019.] A hearing was set for Sept. 25, but was later delayed because of objections filed by other Iowa Pacific creditors that have alleged the company also owes them millions of dollars.
On Sept. 23, Kenneth Bitten of Mid-Atlantic Rail Car filed a motion alleging that Iowa Pacific and its president, Ed Ellis, owed his company hundreds of thousands of dollars for approximately 40 passenger cars he sold to the company a decade ago. In the days and weeks since, other companies and individuals have made similar claims, including Independent Locomotive Leasing, LLC, and RailWorks Corporation.
In a separate case in U.S. Bankruptcy Court in Colorado, three other creditors — the San Luis Central Railroad, Ralco, LLC, and the South Middle Creek Road Association — alleged that the San Luis & Rio Grande owed them a combined $1 million. The three creditors filed a motion to force the San Luis & Rio Grande into bankruptcy but that effort was in violation of the Illinois court’s appointment of a receiver and thus invalidated. It is possible that the three creditors in Colorado will join the the Illinois case as intervenors.
On Oct. 18, a month after Nova Advisors had made its request to expand the receivership, Judge Thomas M. Durkin signed an order placing 22 companies associated with Ellis into receivership. Included in the order were Iowa Pacific Holdings, Permian Basin Railways, Saratoga and North Creek Railway, Chicago Terminal Railroad Company, Hoosier State Train LLC, and others. The motion to expand the receivership did not include the Mass Coastal Railroad, a freight and passenger railroad on Cape Cod, but noted that it could be included at a future date.
According to court documents, the railroads are also subject to “substantial claims” by the Internal Revenue Service.
In September, auction company Ozark Mountain Railcar had listed a number of Iowa Pacific locomotives and cars for sale in an apparent effort to raise money to cover the company’s debts. Included in the listing were two steam locomotives, multiple F and E units and two rare BL2s, along with numerous passenger cars.
Iowa Pacific was founded in 2001 and has operated numerous freight and tourist railroads across North America.
There’s a company called Sunshine Pacific Corporation LLC that is looking to take over operations. The owner is looking for a private/silent investor. It will be interesting to see if he is successful.
God save the former MILW Coffee Creek sleeper Skytop… the only one Olympian Hiawatha observation carbody that survives.
In reference to the Saratoga & North Creek Railroad, formerly operated by Iowa Pacific, the former shop switcher at Alco’s Schenectady Works, #5, was on the S&NC’s property. Is it one of their locomotives to be auctioned? Is it still in Saratoga County, NY, on rails owned by the Town of Corinth, or is it elsewhere ? Who now owns it? New York State Alcophiles are anxious to know the status of Alco #5.
The original narrow gauge crossing was Veta Pass. In 1899 the D&RG double tracked from the town of La Veta and built the second track to standard gauge and it went over the ridge 8 miles south of the narrow gauge. Both lines were operated in 1900, 1901 and 1902. Pens were built at La Veta for sheep or cattle transfer to SG. The Standard Gauge went over LA VETA pass and rode on larger standard gauge rails laid out side the 30# narrow gauge rails all across the valley from Wagon Creek Jot to Alamosa. It was miles of 4 rail track except in the couple towns of Blanca, Fort Garland where a draw rail took it to 3 rail track where switches were built. Bob Richardson found train order for meet of ng and sg engines at Fort Garland in 1901. Because of the different height of rail, you can not 3 rail this long section because it tilts the cars too much with all weight on one side of the bearings. Colorado law permitted any distance away for a second track so the land use was per the original act of US Congress of right of way, even for the second track through the Trinchera Land Grant. Later they traded right between the two lines and then TE gave the r/w to the county for the road. The present highway uses a third crossing to the north of original ng line.
What Paul Bouzide said.
There are indeed three ways over the Sangre de Christo Range called La Veta Pass. All lie across the same saddle in the ridge. The modern US highway 160 takes one. The standard gauge rail line follows a longer alignment about one to two miles south. The original D&RG narrow gauge route survives as a passable dirt road, which diverges from the modern highway on both sides of the summit and can be driven (if cautiously) by any vehicle with reasonable clearances. Near the valley the modern highway and the original route run usually in common with the highway subsuming the grade.
I’m glad you got to ride the “Rio Grande Scenic”–a true a fair title!
Anna Harding;
If the San Luis and Rio Grande somehow survives as a passenger as well as a freight carrier move heaven and earth to ride over La Veta (and it is La Veta) Pass. The Rio Grande’s “regular” Denver–Alamosa passenger service almost always ran as an overnight service, in order to connect to the narrow gauge “crack” SAN JUAN EXPRESS at Alamosa for the run (by day) over Cumbres Pass to Durango. Only after that service died in 1951 and until 1953, when all passenger service to Alamosa ended did, the Grande run over the La Veta Pass line by day–and then with no PR because they already wanted out.
The line is truly spectacular–multiple horseshoe curves, tunnels, towering peaks all around and a summit above 9000 feet! This was the best addition to the Colorado tourist rail scene since service returned to the Royal Gorge and it will be missed.
When I ran rail tours for 35 years we frequently warned our clients regarding any passenger route to “do it now”–because you just never knew when the end might come. Think of the East Broad Top, big steam in action at Steamtown, regular RDC service on BC Rail, the White Pass and Yukon from Carcross to Whitehorse, etc. It can be a big deal for awhile and gone tomorrow. Of course some treasutres also return–again look at the WP&Y from Skagway to Carcross–but you never know.
The SL&RG lin over La Veta Pass is magnificent. There is still a solid base of freight traffic in the San Luis Valley–so someone will probably continue freight ops–but passenger service must be seen truly if it resumes next year at all as being the epitome of “do it now”!
Mister Fowler:
I have been over La Veta (I will accept your correction, there are three passes and I can’t keep them straight) several times by rail, but never as a paying passenger.
Yes, you are right, it is a truly spectacular trip, and I would not have missed it for the world. There are many things which live in my memory and which I do not regret doing, such as watching dolphins surfing in the bow wave of an adjacent ship on a hot sunlit day in the Med, with a cerulean blue sky, and water the dark colour of old wine …
I just would like to do it one more time, this time with a ticket, in the comfort of a passenger car, with a cool tall drink by my side. Just once …
The above comments are genetic in nature and do not form the basis for an attorney/client relationship. They do not constitute legal advice. I am not your attorney. More science for Morse Science High School.
Maybe San Luis Central takes over the San Luis & Rio Grande?
G&W looking to expand or Patriot Rail? Possibilities
The smoke has cleared and the mirrors have shattered.
sad day for the rail community.
Mr.Kayganich, I would bet the big guys in the shoreline world aren’t interested in most of these lines. I’d bet they’re viewed as wore down and questionable investments.
Veta Pass, not La Veta Pass … my bad.
AH
If SLRG is embargoed that will leave San Luis Central isolated. This could take them down as well. That being the case, if necessary an argument could be made for SLC to operate SLRG trackage, at least on a temporary basis, through to Walsenburg.
Speaking of La Veta Pass … It has always been on my bucket list to go over it by train one more time … this time while riding in a passenger car … but that’s another story from my misspent youth.
The above comments are genetic in nature and do not form the basis for an attorney/client relationship. They do not constitute legal advice. I am not your attorney. Third boxcar midnight train.
Many of the subsidiaries may be corporate entities without any operations.
I feel sorry for so many people. The employees, vendors, and communities. I also feel sorry for railfans that admire Ed for being pro passenger service. Unfortunately the money spent on the flash should have been spent on doing a few things really well. They put their faith in a guy who moves from one con to the next.
I’m gonna agree with Michael Klass here.
CLARIFICATION… The equipment for sale at Ozarkmountainrailcar.com is not owned by Iowa Pacific, it is owned by a private commercial lender and is sold free and clear.
I got an email flyer on the (2) Baldwin’s today from Ozark. Also several former Pullmans of various vintage. I figured it was the IP fire sale already in progress.
I thought IP sold Permian Basin 2 years ago.