RailNews

San Luis & Rio Grande Put Up For Sale Amid Iowa Pacific Bankruptcy

By Justin Franz

DENVER — Colorado’s San Luis & Rio Grande is up for sale.

This week, the trustee for the bankrupt short line that was once part of the Iowa Pacific Holdings empire, filed a motion in U.S. Bankruptcy Court stating that the railroad in southern Colorado is to be sold by June 1.

Midwest & Bluegrass Rail, a short line operator with four different railroads of its own, has made a stalking horse bid of $7.5 million for the railroad, kicking off a six-week bidding period. If the trustee receives a bid higher than the stalking horse price, an auction will be held on May 26. The sale will be completed at a court hearing on June 1. The sale will include the nearly 150 miles of railroad and other equipment and structures belonging to the Alamosa, Colo.-based railroad. 

Iowa Pacific was founded in 2001 and at one time operated short lines across the United States but it was beset with financial troubles. In the last two years, four different companies associated with Iowa Pacific, including San Luis & Rio Grande, have filed for bankruptcy. Iowa Pacific itself filed for Chapter 7 bankruptcy in U.S. Bankruptcy Court in Northern Illinois on March 22. 

According to court documents, Iowa Pacific and its subsidiaries owe creditors millions of dollars. Among them is the United Railroad Historical Society of New Jersey, which leased nine pieces of equipment to Iowa Pacific only to have them abandoned across the country in various states of disrepair. 

San Luis & Rio Grande operates on three former Denver & Rio Grande Western routes out of Alamosa. It was founded by RailAmerica in 2003 after Union Pacific sold off the lines. Iowa Pacific purchase the route in 2005. 

This article was posted on: April 14, 2021