Bangor & Aroostook sale hits snag due to bankruptcy ruling (12/7/2001)
12/7/2024Bangor & Aroostook Railroad System (B&A) for now will remain the property of Iron Road Railways well into 2002.
A Portland, Maine, U.S. Bankruptcy Court Dec. 4 entered an order for relief against B&A per an involuntary bankruptcy proceeding filed by the railroad's creditors. B&A now falls under Chapter 11 bankruptcy provisions.
A rail investment and management consortium led by Rail World Inc. and Wheeling Corp. Oct. 8 reached an agreement to purchase B&A from Iron Road Railways for $62 million.
The sale — which was scheduled to close by year-end — included the operating assets of 420-mile Bangor & Aroostook Railroad Co., 294-mile Canadian American Railroad Co., Van Buren Bridge Co., Logistics Management Systems and 86-mile Northern Vermont Railroad Co. Inc. (except for a section south of Newport, Vt.), as well as stock in 186-mile Quebec Southern Railway Co. Ltd.
But the bankruptcy proceeding places a cloud over the transaction; The consortium plans to delay the sale — possibly for several months — while it works with B&A to negotiate an agreement with the railroad's creditors and appoint a trustee.
"We've asked the court to grant us authority to continue operations of the railroad in the ordinary course pending [the trustee's] appointment," said B&A President Fred Yocum in a prepared statement. "We hope that negotiations for the sale can proceed."
Source: Progressive Railroading Daily News