Bids due Friday for the San Luis & Rio Grande Railroad
BIDS are due at 5 p.m. Friday to purchase the San Luis & Rio Grande Railroad and set it free from Chapter 11 federal bankruptcy protection. Whether there are any willing buyers, or a buyer, we’ll know soon enough.
The minimum bid requirement is $5.75 million.
Bankruptcy trustee William A. Brandt Jr. requested the bid auction after being unable to find a suitable buyer over the past 1,000 days that the railroad has been in federal bankruptcy protection. He told Alamosa Citizen earlier this week he has four potential buyers. Whether anyone will actually submit a bid is another question.
If Brandt determines he has more than one qualified bid, then an auction would be held on Aug. 2, at 10 a.m., according to court filings.
Anticipating a sale, Brandt, as trustee of the railroad, sought court approval for a loan of $200,000 from the San Luis Valley Development Resources Group & Council of Governments to help meet current payroll and other capital and operational expenses. The court approved the request on July 22, and the infusion of cash will help keep the railroad moving while a purchase is completed.
At least that’s the hope and the plan.
The bids originally were due July 10. But through objections by Big Shoulders Capital, LLC and other filings by Brandt, including the need for a cash infusion via the “Postpetition Financing” loan provided by San Luis Valley Development Resources Group & Council of Governments, the Colorado Bankruptcy Court set the July 29 deadline.
Big Shoulders Capital, LLC is the single largest creditor in the bankruptcy proceeding. It is owed $5,591,195.32, which is why the minimum bid to purchase the railroad is $5.75 million. There’s also the question of whether Big Shoulders will submit a bid for the railroad. Brandt isn’t sure it will. If there aren’t any bids, Big Shoulders could have a different bargaining position if it has an interest in the railroad.
Rio Grande County has raised another concern, and that’s potential buyers of the railroad who have expressed a desire to scrap the tracks in Rio Grande County west into Del Norte and beyond. Brandt said he would address any such issues once he sees the bids and who the bids come from on Friday.
The counties in the San Luis Valley and Huerfano County, which are owed back taxes, have been working through agreements with Brandt on how those taxes would be paid. Alamosa County, for example, would agree to take 50 percent of what it’s owed at the close of a sale and then the other 50 percent over a period of years. Other Valley counties have said they also would take 50 percent of what is owed and wait five years before payment of the other half of the owed taxes. Alamosa County wouldn’t go that far.
As bankruptcy trustee Brandt is charged by the federal court with keeping the business operating and figuring out how to make it work while a buyer is sought. He’s done that for more than two years.
Now we’ll see if he’s done enough to make a sale.