Mt. Hood Railroad’s assets and business operations have been turned over to Novo Advisors, a financial advisory firm, after a U.S. District Court judge ordered the railroad’s owner, Iowa Pacific Holdings, to place the railroad into receivership.
Receivership is a type of bankruptcy protection, where a company that can’t meet its financial obligations turns over its assets to a legally-appointed receiver, who is charged with helping the company financially recover.
Big Shoulders Capital LLC filed a motion with the U.S. District Court in Northern Illinois on Sept. 9 to place two of Iowa Pacific Holdings’ railroads — Mt. Hood Railroad and the Colorado-based San Luis & Rio Grand Railroad Inc. — after Iowa Pacific defaulted on a $5 million loan from Big Shoulders Capital, according to TRAINS News Wire. The court granted the request the same day.
“Right now, as far as our daily operations, it’s business as usual,” said Ron Kaufman, general manager of Mt. Hood Railroad.
Meanwhile, two Mt. Hood Railroad locomotives and six railcars have been put up for sale by Ozark Mountain Railcar, a brokerage firm that specializes in the sale of railroad equipment, at prices ranging between $32,500 and $157,500. None had been sold as of press time.
The equipment that’s for sale is either excess equipment or equipment that’s being replaced by an upgrade, Kaufman said, and any potential equipment sales would not impact Mt. Hood Railroad’s daily operations.
Novo filed a separate motion on Sept. 23 to place six other Iowa Pacific companies — including Permian Basin Railways, the subsidiary that officially owns Mt. Hood Railroad — into receivership, and a hearing was held Wednesday, Sept. 25 (outcome unavailable by press time).
Mt. Hood Railroad has been owned by Permian Basin Railways, a subsidiary of Iowa Pacific Holdings, since 2008. It had previously been owned by a group of 20 local investors who had bought the railroad from Union Pacific back in 1987 and, looking to retire, put the railroad and its properties up for sale in 2007, according to Hood River News archives.
Hood River County is currently doing its due diligence on the process towards seizing Mt. Hood Railroad property for failing to pay property taxes for the last three years. The county is currently awaiting advice from an attorney on what steps need to be taken now that Mt. Hood Railroad is in receivership.
In a previous interview, Ed Ellis, president of Iowa Pacific Holdings, said that a large portion of Permian Basin’s current financial difficulties are the result of the Federal Railroad Administration (an earlier version of this article erroneously said the loan was from the Federal Highway Administration) pulling a substantial loan in 2013. The company then had to shift to a different loan, which ultimately cost the company $28.5 million, Ellis said, starting the company down a slippery slope of financial difficulty.
Ellis did not respond to phone or email requests by the Hood River News for comment by press time.
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