Western Railroad Discussion > Iowa Pacific-San Luis & Rio Grande - Receivership

Forwarding info-Big Shoulders Capital LLC, ($5 million loan to Iowa Pacific) filed a motion in U.S. District Court (9 Sept 2019) 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.  Recession coming-?!?-🙀💰💸

Image 1-31 Jan 2008 Iowa Pacific moved steam locomotives up over La Veta Pass, Colorado.

2-29 Sept 2018 Iowa Pacific train at Antonito, CO.  SLRG 4141, GP40FH-2, ex-New Jersey Transit with covered hoppers.

3- SLRG 100 E-unit in Illinois Central inspired paint scheme at Alamosa, Colorado.



Edited 2 time(s). Last edit at 09/16/19 04:34 by cozephyr.

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Iowa Pacific 100 E-unit was moved to Alamosa, CO, early 2019 and pressed into freight service.  Milepost 252 at Alamosa.



Edited 1 time(s). Last edit at 09/16/19 04:33 by cozephyr.

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Here is the article on TRAINS.

http://trn.trains.com/news/news-wire/2019/09/13-san-luis-rio-grande-mount-hood-railroad-placed-into-receivership

I was glad to be able to fire #18 on her last run on the Mt Hood RR.  Jim Thomas caught us on film.

Martin



Edited 1 time(s). Last edit at 09/16/19 04:41 by LoggerHogger.

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Nice heavyweight car #9168 with roller bearing trucks!  Does anyone know what this car is is?

"According to court filings, the owner of the two railroads consented to the properties being put into receivership.  Recession coming-?!?-🙀💰💸"

Nope, just Ed Ellis pissing away all the company's profits playing 1:1 scale trains.  Not a thing to do with the economy.
 

Not surprised, when you try to operate a freight railroad like a museum and buy up equipment like a model railroader on Ebay after payday, don't expect to be successful. 
 

The SL&RG has done zero to improve traffic, understanding Ed's $$$$ situation I'd still be in court
working on an interchange agreement with BNSF who runs many daily trains through Walsenburg.

Out

You would probably know more on that than me, Out, but did UP leave the obligatory paper barrier in place when they sold the line off to RailAmerica (and subsequently the SLRG) which prevents them from interchanging with BNSF?

Nebkota in Nebraska and shortlines in South Dakota (and elsewhere) were obstructed by CNW-UP and BN/BNSF both in rates and simple cooperation. I'd presume this works against the shortlines. ICG and IC Industries screwed over their spin-offs as did CSX, Conrail, NS, etc.

ShortlinesUSA Wrote:
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> You would probably know more on that than me, Out,
> but did UP leave the obligatory paper barrier in
> place when they sold the line off to RailAmerica
> (and subsequently the SLRG) which prevents them
> from interchanging with BNSF?

callum_out Wrote:
-------------------------------------------------------
> The SL&RG has done zero to improve traffic,
> understanding Ed's $$$$ situation I'd still be in
> court
> working on an interchange agreement with BNSF who
> runs many daily trains through Walsenburg.
>
> Out

To answer a question posed in a subsequent post, my understanding is that the UP deliberately shed what became the SLRG without any interchange agreement possible at Walsenburg, except with UP.  I don't know whether that ever changed.  

According to some shippers that I know in the San Luis Valley, the SLRG has never been very aggressive about trying to develop new freight business or even at keeping what business it has.  Another factor, not under the SLRG's control, is that water compacts between Colorado and downstream states in the Rio Grande River drainage have caused a significant percentage of irrigated farmland in the SLV to be taken out of production, meaning less ag commodities are even available to ship by rail out of the SLV.  All of that said, rail transportation is critical to keeping agriculture alive in the SLV, but, unfortunately, Colorado's completely metropolitan-dominated state politicians couldn't care less about agriculture in the state.

As for the Rio Grande Scenic excursion trains, they always struggled for ridership, though the scenery between La Veta and Fort Garland was pretty magnificent.  I say "was" because the Spring Fire in the summer of 2018 pretty much burned up much of the forest along the most scenic part of the SLRG.  It will probably take a century for the forest to grow back to look anything like it was before the fire.  I feel sorry for the people working at the SLRG--there are some good folks there, but they have been dealt some pretty tough blows from which it will be hard to recover.  What the SLRG desperately needs is an operator that is adept at growing the freight business along the line.  I have also said this before:  Colorado's political commitment to rail transportation anywhere outside of the metro areas of the state has been, for the most part, pathetic.  Rural Colorado (outside of a few fancy resort towns)  now wields almost no significant political power at the state level, so rural Coloradans are now essentially second-class citizens in their own state.  That treatment extends to things like rural rail service, too.

I was told by some in the operating office of SL&RG was that UP had a strangle hold on them as they could only interchange with UP.  Therefore rates remained high.  They wished they could have BNSF as a competitor to get lower rates so they could grow their business.  

Earl's comments about the loss of traffic is something I did not know about serious the drop was.  But, on the other hand SL&RG was in the freight car storage business  big time with hundreds of cars stored on its lines.  That makes it odd that they would go into receivership unless the money was used for other lines of Iowa Pacific.

Ed's been leveraged to the hilt ever since Iowa Pacific was around.  As Earl stated in the Passenger forum, the downward spiral began when the profitable lines (Arizona Eastern and the Lubbock & Western) were sold off.  Although the FRA grabbed some of that money to pay off loans used to buy the properties, it still goes to show you where playing 1:1 scale trains leads.

The STB will act on the issue of an unsatisfactory interchange agreement, just takes  the right legal team and a bit of local
PR assistance ie shippers such as Coors.

Out

It is my understanding that UP kept a mile or so of track west of the junction in Walsenburg to prevent interchange with any other company, ie: BNSF.
That is a typical tactic of both UP and BNSF.

Posted from Android

While SLRG can only interchange with the UP, there were persistent rumors that the SLC has some sort of haulage agreement rights to interchange with the BNSF.

Coors could initiate such an arrangement, BNSF would have the haulage agreement and I doubt that UP would
attempt to provide crew and power for that one mile of intermediate track.

Out

Any shortline that can only interchange with one of the major railroads has it's hands tied. No choices for shippers nor the shortline. All sorts of problems with division of rates, car availability and interchange dwell times.  A better term might be "slave" line. Did this casue a bankruptcy?  Probably not, but limitations do not help.

Any good attorney should be able to assert that the Big Class One's bully the shortlines. UP's arrogance (per what so many people have told me) has really compounded issues.

bluesman Wrote:
-------------------------------------------------------
> Any shortline that can only interchange with one
> of the major railroads has it's hands tied. No
> choices for shippers nor the shortline. All sorts
> of problems with division of rates, car
> availability and interchange dwell times.  A
> better term might be "slave" line. Did this casue
> a bankruptcy?  Probably not, but limitations do
> not help.

It's almost rare for a shortline to have two-carrier access.  The Class Ones were real careful about denying this feature when they were spining off a lot of these lines. 

I'm a long way from being in the shortline railroad business, but I don't think I would want to make the attempt unless I had two-carrier access. 

I think that may have been one of the problems with OmniTrax trying to operate the line to Churchill.  I believe they only connected to CN.  Access to CP might have been a game changer.   

Single shipper access is certainly a negative factor, but the bigger problem with a lot of these lines (Churchill and SLRG included) is long stretches of track with no customer base to finally get to the active shippers.  There is not much to speak of between Walsenburg and Alamosa, other than a rugged mountain railroad requiring a good deal of upkeep.  The SLRG could be a viable operation  with the traffic generated from Alamosa, Antonito, and Monte Vista were it not for that huge stretch between Alamosa and Walsenburg. 

I don't really see any viable future for this line short of government subsidies in the name of business development for the region.  The passenger trains don't bring in nearly enough revenue to cover the costs of all the infrastructure.