Iowa Pacific's Massachusetts Coastal Railroad expected to enter receivership

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CHICAGO — The company overseeing the embattled Iowa Pacific railroads has requested that the Massachusetts Coastal Railroad be placed into receivership.

The Massachusetts Coastal, also known as the Mass Coastal, operates freight and passenger service on Cape Cod and nearby portions of southeastern Massachusetts. It was the only Iowa Pacific railroad not to be placed into receivership earlier this fall when it was revealed the company owed millions of dollars to numerous creditors and contractors [See “Additional Iowa Pacific railroads placed into receivership,” Trains News Wire, Oct. 23, 2019].

A company or property is placed in receivership to protect the assets of an organization when it cannot meet its financial obligations or enters bankruptcy.

On Nov. 26, Nova Advisors, the receiver appointed earlier this year, filed a motion in U.S. District Court to have Iowa Pacific’s “Massachusetts assets” placed in bankruptcy protection, along with more than two dozen other companies already in receivership. It is expected that the judge will approve the motion at an upcoming hearing. The “Massachusetts assets” also include companies associated with Massachusetts Coastal, including Cape Rail, Inc. and the Cape Cod Central Railroad.

According to court documents, Massachusetts Coastal has been operating independently of Iowa Pacific since 2018 and that a minority partner, railroad president and chief operating officer Christopher Podgurski, has recently made an offer to purchase the entire railroad.

According to court records, Iowa Pacific and its associated companies owe Big Shoulders Capital, one of its primary creditors, more than $4.6 million. Court documents state the railroads are also subject to “substantial claims” by the Internal Revenue Service.

Nova Advisors was appointed receiver over the railroads earlier this fall and, according to officials close to the railroad, is managing Iowa Pacific’s day-to-day operations. Iowa Pacific founder and former president Ed Ellis is no longer with the company.

Mass Coastal is one of three Iowa Pacific railroads where operations are continuing as normal despite the company’s legal troubles. The others are Colorado’s San Luis & Rio Grande and Oregon’s Mount Hood Railroad.

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