SAN LUIS VALLEY — Another step was taken in the three-year bankruptcy process for the sale of the San Luis and Rio Grande Railroad. According to reports from Rio Grande County Commissioner John Noffsker, the Colorado State Bankruptcy Judge approved the bid from KCVN, LLC for $10.7 million.
KCVN is owned by Stefan Soloviev. KCVN is the parent company of Colorado Pacific Railroad.
With the bid approved, the next step will be for the sale to be approved by the Surface Transportation Board.
Noffsker stated that the hearing for the bid approval lasted about three hours, most of which was due to the objections that had been filed for the sale. Noffsker stated that there were five objections to the sale in total, three of which were dismissed immediately and the remaining two belonged to San Luis Valley Great Outdoors and the Road Association from Huerfano County. Noffsker stated that the objection by the Road Association from Huerfano County remains open with potential for resolution before final steps are taken.
The bankruptcy judge determined the objection from SLVGO as speculative with no witnesses or evidence to back up the claim and dismissed the objection after hearing from the organization’s attorney, according to Noffsker. The objection filed by SLVGO also claimed that the trail system it was proposing would bring an estimated $10 million to the economy of the San Luis Valley should one be created to which the judge stated that there was no evidence to support that claim.
Even though the bid was approved for KCVN, LLC to purchase the line for $10.7 million, Noffsker stated that there still is a lot to be done before the sale is final. The bankruptcy trustee handling the process will now expedite the sale to the Surface Transportation Board for approval and the sale could be finalized before the end of 2022.
A settlement and plan and resolution of several claims for money owed will be the next step in the process to see that all claimants have been repaid from the sale price. Noffsker stated that a $2.4 million claim from Big Shoulders Capital and a $175,000 fee will be paid in cash at closing with the remaining amount to be delegated to the remaining claimants.
During the hearing, it was also mentioned that due to a technicality that hasn’t been explained in detail, the bankruptcy trustee may withhold taxes owed to Rio Grande County for the years 2011 and 2012 which would make their claim significantly less should the trustee choose to adhere to the decision. The trustee could choose to pay the full amount owed once a settlement resolution has been reached and all back taxes owed to several counties throughout the San Luis Valley and Huerfano County could be paid in full.
Noffsker stated that though several loose ends still exist, the San Luis and Rio Grande Railroad has a high probability of being sold by the end of the year.