LOS ANGELES — The sale of bankrupt Pacific Imperial Railroad assets with a potential intermodal connection to Mexico is moving forward as court proceedings continue in California.
On March 10 a U.S. Bankruptcy Court judge approved the sale of track leases and development rights on the Pacific Imperial’s Desert Line to International Transportation Association LLC. International Transportation, a Nevada corporation, is affiliated with the Baja California Railroad, Pacific Imperial's Mexico connection and part of a planned bi-national operation.
The two railroads had agreed earlier on a sale price for the Desert Line assets of $3.8 million plus another $10 million or more to cover unmet Pacific Imperial obligations to repair track and bridges and begin operations. That work is on the easternmost 10 miles to the Union Pacific connection at Plaster City.
No other qualified bidders stepped forward with a better offer by the March 6 deadline, according to court records.
The initial bankruptcy filing in October indicated Pacific Imperial had $1.6 million in cash and no accounts receivable against debtor claims of more than $8.2 million. Among the few hard assets listed were three GP40 locomotives valued at $50,000 apiece.
The bankruptcy case remains open with a final accounting of payments to creditors still to come. Two separate investor lawsuits also are pending.
The Desert Line, owned since 1979 by the San Diego Metropolitan Transit System, runs 70 miles east from the Baja California Railroad's Tijuana & Tecate on the U.S.-Mexico border at Division to Plaster City. From there it's 50 track miles to Union Pacific's Sunset Corridor at Niland.
The transit agency leased the line to Pacific Imperial in 2012, and the short line in 2016 subleased to Baja California about 60 miles from the border to near Coyote Wells. Pacific Imperial assets covered in the sale are the Desert Line lease, the Baja California sublease and rights to develop an intermodal yard and other property at Coyote Wells.
Pacific Imperial had touted Coyote Wells as its site for an intermodal yard. From there it and Baja would have offered international rail and highway cargo a bypass around the congested ports of entry linking suburban San Diego and Tijuana, Mexico.
The lease required Pacific Imperial to complete bridge repairs on its eastern 10 miles by the end of 2016, track repairs by March 1, begin train tests by April 1 and run at least three trains a week by the end of 2017.
The combined route covers most of the former San Diego & Arizona Eastern Railway, officially opened in 1919 and assaulted by repeated natural disasters until owner Southern Pacific filed for abandonment in the late 1970s. Later lessees endured similar headaches operating through mountains and canyons subject to floods, rockslides, tunnel collapses, and bridge fires.