A week after its railroads in Colorado and Oregon were placed into receivership, the receiver, Novo Advisors, has filed a motion to place six other Iowa Pacific companies into bankruptcy protection. The six corporations listed in the motion include: Iowa Pacific Holdings LLC, Chicago Terminal Railroad Co., Saratoga and North Creek Railway LLC, Permian Basin Railways Inc., Heritage Rail Leasing LLC, and High Iron Travel Corp. All six companies are led by Ed Ellis.
On Sept. 9, one of Iowa Pacific’s creditors, 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.
A hearing to determine if the six other companies will be placed in receivership has been scheduled for Sept. 25.
In a statement to Trains News Wire at the time of the initial filing, Ellis said the move “was necessary to continue funding with our lenders.”
The motion to expand the receivership did not include the Mass Coastal Railroad, a freight and passenger railroad on Cape Cod. In an email to Trains News Wire on Monday, Ellis wrote that he could not comment on why Mass Coastal was the only Iowa Pacific property not being placed into 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.
On Monday, the railroad auction company Ozark Mountain Railcar had listed a number of Iowa Pacific locomotives and cars for sale. Included in the listing were two steam locomotives, multiple F and E units and two rare BL2s, along with numerous passenger cars.
