Pacific Imperial Railroad (PIR) has filed for Chapter 11 bankruptcy protection as part of its plan to reopen an east-west line connecting Mexican maquiladoras with the U.S. freight rail system.
CEO Arturo Alemany said in an Oct. 14 news release the reorganization would allow PIR to secure a partner with enough capital and expertise to help develop the company’s assets so the company can pay its debtors.
The release said various claims that arose before Alemany’s involvement have “had a chilling effect on PIR’s ability to raise capital.” It said the filing will help the company maximize its assets while “providing an effective form for resolving any disputes regarding (debtors’) claims.”
Since 2012, PIR has owned a long-term lease of the idle, 70-mile Desert Line linking San Diego with Imperial County. It recently signed a multimillion-dollar agreement with Baja California Railroad Inc., which operates the Mexican part of the line, to repair the portion of the line that dips into Mexico.
The line’s owner, Metropolitan Transit System, has estimated the necessary repairs at $60 million-$70 million.
The company’s plan calls for sending 100-car trains to Desert Line’s eastern terminus in Plaster City, where they would be diverted onto the much larger Union Pacific Railroad. This would allow shippers to bypass a route parallel to Interstate 5 through Orange and Los Angeles counties.
PIR says reopening the line would ease traffic at the international border, reduce air pollution, promote commerce and create jobs.
