KCVN LLC and its parent company, Soloviev Group, won federal bankruptcy court approval Monday for its $10.7 million cash purchase of the San Luis & Rio Grande Railroad. KCVN and Soloviev will now work to close the sale as well as gain approval from the federal Surface Transportation Board which regulates railroads.
“I think we have a way forward,” U.S. Bankruptcy Judge Thomas B. McNamara said at the end of the nearly three-hour hearing Monday. McNamara went back through the process that yielded KCVN’s winning bid. The sale hearing also included OmniTrax being approved as the backup bidder at $10.5 million in the event KCVN is unable to close on the purchase of SLRG.
Colorado Pacific Railroad, which is owned by KCVN and Soloviev, will operate the San Luis & Rio Grande Railroad, with Matt Prince serving as general manager. Prince and Colorado Pacific Railroad currently operate a short line railroad about 27 miles east of Pueblo that runs parallel to Colorado State Highway 96. Prince will add the 150 miles of the San Luis & Rio Grande Railroad to Colorado Pacific’s daily operations once KCVN closes on the transaction.
Trustee William Brandt, who has been overseeing railroad operations and marketing the railroad for sale since December 2019, will file a plan of reorganization with the bankruptcy court that shows how the $10.7 million will be used to pay creditors involved in the Chapter 11 proceeding.
Brandt has already worked out an agreement with Big Shoulders Capital, which is owed $5.5 million as the largest secured creditor, the court was told. Big Shoulders Capital will receive $2.4 million at the closing and has agreed to other conditions to satisfy its full claim.
EARLIER COVERAGE
San Luis Rio Grande Railroad prepares to come out of bankruptcy
July auction set for San Luis Rio Grande Railroad
San Luis Rio Grande Railroad must handle freight first and foremost
Bids due Friday for San Luis Rio Grande Railroad
OmniTrax shows a mixed record of success with short line rail acquisitions
OmniTrax moves forward with purchase of SLRG Railroad
Soloviev Group enters bidding for SLRG Railroad
Bankruptcy judge sets auction, sale hearings for SLRG Railroad
SLRG Railroad auction nets $10.7 million bid
Alamosa, Conejos, Costilla, Rio Grande and Huerfano counties will also be paid the real estate taxes owed to them. Collectively the six counties are owed just over $3.8 million in back taxes, with Huerfano owed $1.18 million and Rio Grande County $877,157.
The San Luis Development Resources Group, which recently provided $800,000 to Brandt to help him keep operations going, will also be repaid in full once the transaction closes.
Stefan Soloviev, chairman of the Soloviev Group, was in the Denver bankruptcy courtroom during McNamara’s review of the asset purchase agreement.
