United States Department of Transportation
i
Intercity passenger rail : potential financial issues in the event that Amtrak undergoes liquidation
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2002-09-01
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Abstract:If Amtrak had been liquidated on December 31, 2001, secured creditors
and unsecured creditors—including the federal government and Amtrak
employees—and stockholders would have had about $44 billion in
potential claims against and ownership interests in Amtrak’s estate. (See
fig. 1.) The federal government would have been by far the largest
claimant, accounting for about 80 percent of the value of all creditor
claims and ownership interests. It would have had about $14.2 billion in
secured claims against real property, primarily property making up the
Northeast Corridor, and about $4.4 billion in claims against equipment. It
also would have had an ownership interest totaling about $17.1 billion in
Amtrak preferred stock and cumulative unpaid dividends. Of the $4.4
billion in unsecured creditor claims, the largest category would have been
Amtrak’s employees, with potential claims of about $3.2 billion for
payments that Amtrak would owe to terminated employees. (These
payments, stemming from collective bargaining agreements, are called
“labor protection payments.”) It is unlikely that secured and unsecured
creditors’ claims would have been fully satisfied, because—other than the
Northeast Corridor—Amtrak’s assets available to satisfy these claims and
interests (such as equipment and materials and supplies) are old, have
little value, or appear unlikely to have a value equal to the claims against
them. The market value of Amtrak’s most valuable asset (the Northeast
Corridor) has not been tested. While the corridor has substantial value, it
is subject to easements and has billions of dollars of deferred
maintenance. Furthermore, it is not likely that the stockholders would
have received any payment for their ownership interest.
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