Filed by Big Shoulders Capital LLC against San Luis and Rio Grande RR Inc. and Mt. Hood Railroad Company on Sept. 9. 2019 in the US District Court for the Northern District of Illinois. Judge Thomas M. Durkin, receivership judge in Chicago, where the case originated, ruled the receivership will go forward and the bankruptcy court is expected to let go of the jurisdiction so it will stay in Chicago.
Conejos County Attorney Nic Sarmiento said it would be appealed. Big Shoulders Capital LLC, ($5 million loan to Iowa Pacific) 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. General Manager Ed Ellis was given $7 million and part of the agreement was that they would have a third party receivership come in and run the ship right.
They are looking to sell assets and there are more liabilities than assets. An estimated $17 million is owed to the federal government in payroll taxes and Sarmiento said there are probably superior liens to Conejos County’s. On October 16, 2019, an involuntary chapter 11 petition was filed against San Luis & Rio Grande Railroad, Inc. pursuant to 11 U.S.C. 303 in the United States Bankruptcy Court for the District of Colorado. Owners reportedly want to see the railroad continue operating as a business.