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.
Ed’s greatest strength is getting people to ignore or see past all of the less-than-ideal business practices with the flash of the great looking equipment and onboard product. Unpaid taxes, unpaid loans it is not new thing. It has happened multiple times just at Iowa Pacific. Sure others have done the same in other lines of business, but rarely is accompanied by “They were so innovative, if only people were not wanting their loans repaid”.
Perhaps Ed’s greatest weakness is spending so much on the flash and buying cars and locomotives that the actual core business was ignored. There could be a small business in a boutique tour service with 2 or 3 private cars on the rear of an Amtrak train providing a level of service that is very different from Amtrak. What was not necessary was the 5 car monster (with a baggage car!) added to the City of New Orleans.
Likewise, the Hoosier State did not really need a great meal service pulled by a barely serviceable F40PH. It needed a schedule and frequency better than the current state. Ed was not really in a position to provide. He also wasn’t adequately capitalized to even operate the service in 4x weekly form.
Mr McGuire,
I point you in the direction of Rocky Mountain Railtours in Canada for your perusal, they don’t seem to have a problem packing in the passengers for a premium service…so to say there aren’t enough people willing to pay big bucks for fancy rail travel…is a falsehood.
Mr McGuire, I rode the Saratoga & North Creek about 5 years ago. There was one coach for economy, and it was only partly full. There were at least 2 super-domes (with dinner service) full of first class riders. There was also a cafe with meal service on the dome’s lower level which was available to the coach passengers. Obviously most people preferred first class. I also road the Rio Grande Scenic about 10 years ago. Very friendly crew, and I even stumbled into my first cab ride. Mr Ellis seemed to be the only one experimenting with US passenger rail in the last decade, prior to Brightline.
It’s unfortunate it has come to this for whatever reason. From what I’ve read he had the best of intentions in everything he tried. I too would be interested in a story of the history of the Ellis “empire”.
If I recall right, and somebody please correct me if I’m wrong (Google searches turn up almost nothing but old pics), but didn’t Ed Ellis have an interest in Golden Arrow Excursions that ran trips in the Madison WI area in the mid ’80s using Glen Monhart’s ex-ACL Es? IIRC, he may have also been involved in some way with other investors with the Chicago, Madison & Northern (second resurrection), WICT, Wisconsin Western, and/or Central Wisconsin. I was young but recall Ed’s name during the time somehow.
John Rice….regarding the UK operations – I think that scarcely visible rather than “vibrant” is a better adjective.
For all involved, Iowa Pacific still owns 2 vibrant lines in the UK still.
Mr. Ellis did briefly write a columnist for TRAINS (“Diverging Approach”) during the turn of the century. He was a senior executive of the Amtrak mail and express business unit, but that organization was killed off when Amtrak reorganized under David Gunn. Then Ellis got into the short line business trying to revive lines given up by the Class Is. It’s sad to see someone who’s been so involved in the business not succeed. And Robert Heinlein to the contrary, the entrepreneur loses a lot more than an employee.
Robert McGuire – You are certainly entitled to your opinions and conclusions drawn therefrom, even if , in my opinion, they are so wrong: 1. Amtrak did sabotage Pullman Journeys with restrictions, added costs, and outright refusals of service, just like today’s private car “policy.” Many people today will pay for real first-class rail service, witness all those PV’s that were operating with paying passengers before the recent unpleasantness. As to your comment about “most people,” most people are content with their Hondas, Nissans, and Chevy’s, yet there are enough who will pay the price to sustain Cadillac, Lincoln, etc. 2. Saratoga and North Creek was derailed in large part by Canadian Pacific, who refused interchange of S&NC freight that would have supported the passenger operation. Maybe like Brightline – Virgin looking forward to real estate development to sustain the rail effort. I don’t really know, but I don’t purport to be an expert in Saratoga – Warren County, New York tourist economics. 3. Bob Johnston immediately comes to mind as one Trains Magazine writer who has come down on Amtrak many times. Doesn’t he write the monthly “passenger” column, in addition to his posts on the Newswire? 4. Ed Ellis’ “problems” probably began when he was an Amtrak VP in charge of Amtrak Express, a great idea in my opinion, which pissed off the operating railroads, which caused Amtrak to cave, which caused Mr. Ellis to be looking for work. Again, just my opinion.
I think Mr. Ellis’ problems began with his ill fated attempt to bring back passenger service in the old style. This was doomed to failure from the beginning. There is very little market for this type of service. Most people just want to get to where they are going as quickly and cheaply as possible. And there are too few of the rest to make a living off it. The City of New Orleans and Hoosier State add-on trains were never going to work long term even if Amtrak hadn’t sabotaged them. The Saratoga and North Creek was a failure from the beginning. Fares were too high and tourists didn’t want to spend all that money. All they wanted was an inexpensive train ride and then move on to something else. All that money wasted on cosmetically restoring old passenger cars could have been spent more profitably elsewhere.
I would think that Trains Magazine would do a report on the history and future of Ed Ellis’ railroad empire but I’m not holding out much hope. Like most media, Trains has it’s own biases except in this case they are not political. Just like Trains seldom reports anything negative about Amtrak, I suspect Mr. Ellis is a friend of Trains \Magazine editors and publishers and therefor gains a pass from negative publicity in the magazine.
Mister Blackwood:
Perhaps, but bankruptcy is not my area of expertise.
I am much less concerned for the welfare of Mister Ellis than I am for the welfare of his employees. I have no clue as to what caused this failure (besides the obvious, cash flow issues) but I wish all concerned all the best.
To quote Robert Heinlein, “People who go broke in a big way never miss a meal. It’s the poor slob who is short half a slug that has to tighten his belt.”. Having been hungry myself …
The above comments are generic in nature and do not form the basis for an attorney/client relationship. They do not constitute legal advice. I am not your attorney. Find your own damn whatever.
Anna, you might be what Mr. Ellis can use, a lawyer with a heart as well as a mind for the railroad business.
Central Car Repair LLC appears to still be in business.,
I have never met Ed Ellis and I have no deep knowledge of his business history. All I know is what I have read in the train world press over the years, but it seems to me that he has, since his days with Amtrak, endeavored to promote passenger railroading and its heritage, and on that basis I wish him well during what must be difficult times.
Hopefully there will be brighter days ahead for Mr. Ellis and his railroads.
This isn’t looking good. I don’t know what the corporate structure for Iowa Pacific Holdings is like, so I can’t comment on how far this will go.
I will comment on one incident. San Luis & Rio Grande a few years ago had a passenger service from Walsenburg CO to Antonito that tied in with the Cumbres & Toltec. The two roads coordinated so that it was a fairly seamless deal, and of course Walsenburg is withing striking distance from Denver. This has since been discontinued, and I understand anecdotally that it has had a negative impact on the C&T. In my view unfortunate, but then I have a soft spot in my heart for that railroad.
The above comments are generic in nature and do not form the basis for an attorney/client relationship. They do not constitute legal advice. I am not your attorney. Find your own damn whatever.