October 15, 2013 Articles

Railroads in Bankruptcy: What Happens after a Financial Derailment

New short line railroads face costs that could lead to future bankruptcy cases.

By Thomas Rice

Recently, rail traffic on already existing rail lines has increased, and new short line railroads have been created. The additional traffic has been great for revenues, but that success has not been without some adversity. To maintain operations, short line railroads need to reinvest nearly 30 percent of their annual revenues in infrastructure, including large investments in repairing and maintaining the track. For some short line railroads, these investments may prove to be too costly and lead to future bankruptcy cases.

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