Winning bidder overdue on paying initial deposit
By Tim Rowland
An apparent snag in financing has once again clouded the fate of the Saratoga & North Creek Railway, a bankruptcy court trustee said.
Carol McLean-Wright and her husband John Wright — operating as Doc N Dutchess Railway, a newly formed New Mexico-based LLC — submitted the high bid for the line at a March auction, but the trustee, William Brandt Jr., said Wednesday that they failed to submit a timely deposit on the assets.
A variety of interests have been involved in a tug of war over the line, which some believe can be restored as a useful piece of industrial infrastructure, but others feel should be converted into a recreational rail trail.
The railway filed for bankruptcy last year, and court administrators solicited a viable carrier to buy and run the rails.
Now, Brandt said he is negotiating with the second-highest bidder, a North Creek rail biking company, for sale of the line.
Brandt said there is still a chance that Doc N Duchess’ bid could be executed, but that the opportunity was dwindling. “From my perspective, we’re moving on, but there is a small window of time for Doc N Duchess to take advantage of, and secure, this opportunity — but only if they have real financing lined up,” Brandt said in an email.
The Wrights bid $3.3 million, well above the expected price for the 30-mile track, which has seen scant usage since a titanium mine, its primary customer, shut down in the 1980s.
In a phone interview, McLean-Wright said Doc N Duchess put up the required $35,000 deposit to participate in the auction, but was not informed that further funds would be required prior to the May 6 closing. But she was notified that the company would have to put up $250,000, and later $500,000, to keep the bid viable.
That was a problem, she said, because the Doc N Duchess investors are in Europe, and large financial transfers are under added scrutiny due to Russia’s war with Ukraine, and the desire to keep oligarchs from moving their assets. She said Doc N Duchess officials were aware that financial transitions were being held up and for that reason asked that the closing date be set toward the end of the 90-day term within which the full amount must be paid.
“This is not what we signed up for; we signed up for a May 6 closing,” she said.
She said she and her husband are determined to move forward because they view the work of obtaining a source of rare-earth metals — believed to be abundant in tailings from the old mine at Tahawus — as vital for national security. Rare earth elements are put to a multitude of uses, including night-vision goggles, batteries and a wide array of technology. Most are currently produced by China.
“This is an act of love for the United States of America, at a time that we are being threatened,” McLean-Wright said. “It is for national defense — what I care about is that every third day we hear President Biden saying that we need these metals.”
Rob Harte, co-owner of Revolution Rail, said he could not discuss details of what he said was a fluid situation, but that his company “remains committed to running rail bikes on the line.”
Brandt said there was no hard deadline for Doc N Duchess to submit the deposit, but if talks with Revolution Rail are productive “then events will overtake Doc N Duchess’s ability to do anything.”
A third bidder, the West Coast-based Sierra Railway, dropped out early in the bidding, and protested that it was the only legitimate freight hauler at the auction.
Revolution Rail had, however, said it was partnering with a short-line hauler which would run occasional loads of aggregate on the rails.
The Wrights have proposed a far-reaching plan that would run the gamut from sifting through old mine tailings for rare-earth elements to astronomy-based rail excursions that would take advantage of Newcomb’s dark skies. In an earlier interview, Carol McLean-Wright indicated Doc N Duchess was seeking capital from outside investors.
Whether the latest development will increase the likelihood of an eventual rail trail on the line is unclear. The state Department of Environmental Conservation had petitioned the federal Surface Transportation Board to have the line declared abandoned, but the appearance of three potential haulers who said they could restore the tracks had diminished that likelihood, according to Town of Newcomb officials.
The Open Space Institute had offered $1.5 million for the line with the idea of building a rail trail, which at the time was the best offer the court had. The nonprofit became ineligible because only legitimate carriers could buy the line, and OSI returned to the sidelines.
Editor’s note: This story has been updated to add a response from Doc N Duchess rail company.
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