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[Code of Federal Regulations]
[Title 49, Volume 4]
[Revised as of October 1, 2003]
[CITE: 49CFR250]

[Page 687-692]
 

TITLE 49--TRANSPORTATION
CHAPTER II--FEDERAL RAILROAD ADMINISTRATION, DEPARTMENT OF TRANSPORTATION
PART 250--GUARANTEE OF CERTIFICATES OF TRUSTEES OF RAILROADS IN REORGANIZATION--Table of Contents



Sec.
250.1 Form and content of application.
250.2 Required exhibits.
250.3 Fees.
250.4 Execution and filing of application.
250.5 General instructions.

    Authority: Sec. 3(f) of the Emergency Rail Services Act of 1970, 
Pub. L. 91-663; sec. 1.49(m), regulations of the Office of the Secretary 
of Transportation, 49 CFR 1.49(m).

    Source: 36 FR 770, Jan. 16, 1971, unless otherwise noted.

Sec. 250.1  Form and content of application.

    The application shall include, in the order indicated and by section 
numbers and letters corresponding to those used in this part, the 
following:
    (a) As to the Trustee:
    (1) Full and correct name and principal business address.
    (2) The name and address of the reorganization court under the 
direction of which the Trustee is acting and the docket number of the 
proceeding.
    (3) Name, title, and address of the person to whom correspondence 
regarding the application should be addressed.
    (4) Brief description of the loan and its purpose or purposes, 
including statements of
    (i) The total amount of the loan and the amount of the guarantee 
being sought,
    (ii) The purpose or purposes for which the loan proceeds will be 
used,
    (iii) The maturity date or dates,
    (iv) The date or dates on which the Trustee desires the funds to be 
made available, and
    (v) The rate of interest.
    (5) Statement, in summary form, showing financial obligations to or 
claims against the United States or obligations for which the United 
States is guarantor, if any, by applicant or any applicant's parent as 
to the date of the application, including:
    (i) Status of any claims under litigation; and
    (ii) Any other debts or credits existing between the applicant and 
the

[[Page 688]]

United States, showing the department or agency involved in such loans, 
claims and other debts;
    (6)(i) Statement on behalf of the Trustee that the Trustee has 
endeavored to obtain a loan or loans for the purpose or purposes 
proposed without a guarantee by the Secretary, but has not been able to 
obtain a loan therefor upon reasonable terms, or if only upon terms 
considered unreasonable, a statement setting forth such terms and 
describing any facts relevant thereto.
    (ii) Information as to the Trustee's efforts to obtain the needed 
financing without a guarantee thereof by the Secretary, and as to the 
results of such efforts. (See Sec. 250.2(b)(1) as to exhibits on this 
subject.)
    (7) Full and complete statement, together with independent 
supporting evidence, where feasible, concerning the effect that 
cessation of essential transportation services of carrier would have on 
the public welfare.
    (8) Full and complete statement, together with supporting evidence, 
where possible, demonstrating that cessation of essential transportation 
services by applicant carrier is imminent.
    (9) Full and complete statement, together with supporting evidence, 
if possible, that there is no other practicable means of obtaining funds 
to meet payroll and other expenses necessary to provide essential 
transportation services other than the issuance of Trustee certificates. 
Such statements shall include in detail a complete listing of all 
nontransportation assets of the carrier and corporate affiliates, or 
subsidiaries having a fair market value of not less than $50,000, 
together with the amount of encumbrances thereon, if any, and a 
statement or plan for the disposition or sale of such assets as a means 
of obtaining funds necessary for essential transportation services.
    (10) Full and complete statement, together with supporting evidence, 
if possible, demonstrating, with particularity, that the carrier can 
reasonably be expected to become self sustaining within a reasonable 
period of time.
    (11) Full and complete statement, together with supporting evidence, 
that the probable value of the assets of the carrier in the event of 
liquidation provides reasonable protection to the United States.
    (b) As to the holder or holders:
    (1) Full and correct name and principal business address.
    (2) Names and addresses of principal executive officers and 
directors, or partners.
    (3) Reference to applicable provisions of law and the charter or 
other governing instruments conferring authority to the lender to make 
the loan and to accept the proposed obligation.
    (4) Brief statement of the circumstances and negotiations leading to 
the agreement by the lender to make the proposed loan, including the 
name and address of any person or persons, or employees of the carrier, 
representing or purporting to represent the Trustee in connection with 
such negotiations.
    (5) Brief statement of the nature and extent of any affiliation or 
business relationship between the lender and any of its directors, 
partners, or principal executive officers, on the one hand, and, on the 
other, the carrier and any of its directors, partners, or principal 
executive officers, or any person or persons whose names are required to 
be furnished under paragraph (b)(4) of this section.
    (6) Full and complete statement of all sums paid or to be paid and 
of any other consideration given or to be given by lender in connection 
with the proposed loan, including with respect thereto:
    (i) Name and address of each person to whom the payment is made or 
to be made,
    (ii) The amount of the cash payment, or the nature and value of 
other consideration,
    (iii) The exact nature of the services rendered or to be rendered,
    (iv) Any condition upon the obligation of the lender to make such 
payment, and
    (v) The nature of any affiliation, association, or prior business 
relationship between any person named in answer to paragraph (6)(i) of 
this section and the lender or any of its directors, partners, or 
officers.
    (c) As to the impact of the financing on the environment. (1) 
Summary statement of the use to which funds will be

[[Page 689]]

put and any anticipated impact on the environment. After reviewing this 
submission, the Administrator retains the right to require the Trustee 
to submit a detailed assessment of the financing's impact on the 
environment in a general format to be supplied by the Administrator.
    (2) [Reserved]

[44 FR 23851, Apr. 23, 1979]

Sec. 250.2  Required exhibits.

    There shall be filed with and made a part of each application and 
copy thereof the following exhibits, except that exhibits filed with the 
Administrator pursuant to some other statutory provision or regulation 
which are in the same format as the following exhibits may be 
incorporated in and made part of the application filed under this part 
by reference. While the application is pending, when actual data become 
available in place of the estimated or forecasted data required in the 
exhibits under this part, such actual data must be reported promptly to 
the Administrator in the form required in the appropriate exhibit.
    (a) The following exhibits are required concerning the Trustee and 
the carrier:
    (1) As Exhibit 1, copy of duly certified order of the court, or 
instrument of appointment, appointing trustees of the carrier.
    (2) As Exhibit 2, a certified copy of the order(s) of the 
reorganization court having jurisdiction of applicant authorizing (i) 
the filing of the application with the Administrator for a guarantee of 
the Trustee's certificate; (ii) filing of the application with the 
Interstate Commerce Commission for authority to issue a Trustee's 
certificate; (iii) such pledge of security for the loan and the 
guarantee as the applicant proposes in connection with Exhibit 3; and 
(iv) compliance by the Trustee with conditions to the guarantee imposed 
by law and the Administrator.
    (3) As Exhibit 3, full and complete statement, together with 
supporting evidence, that the probable value of the assets of the 
railroad in the event of liquidation provides reasonable protection to 
the United States.
    (4) As Exhibit 4, a map of the carrier's existing railroad.
    (5) As Exhibit 5, statement showing miles of line owned; miles 
operated; number of units of locomotives, freight cars, and passenger 
cars owned and leased; principal commodities carried; and identification 
of the ten most important industries served.
    (6) As Exhibit 6, statement as to whether any railroad affiliated 
with the carrier has applied for or received any Federal assistance 
since 1970.
    (7) As Exhibit 7, statement showing total dividends, if any, 
declared and total dividends paid for each of the last 5 calendar years 
and for each month of the current year to latest available date.
    (8) As Exhibit 8, a copy of applicant's most recent year-end general 
balance sheet certified by applicant's independent public accountants, 
if available, and a copy of applicant's most recent unaudited general 
balance sheet as of a date no less recent than the end of the third 
month preceding the date of the filing of the application. The unaudited 
balance sheet shall be presented in account form and detail as required 
in Schedule 200 of the Commission's annual report R-1 or R-2, as 
appropriate, together with the following schedules (where changes in 
accounts from the end of the prior year to date of the application have 
not been significant, copies of the appropriate schedules in the prior 
year's R-1 or R-2 with marginal notations listing the changes may be 
substituted):
    (i) Particulars of Account 704, Loans and Notes Receivable, in form 
and detail as required in Schedule 201 of annual report R-1 for the 
Class I railroads, and in similar form for the Class II railroads except 
that for Class II railroads, loans and notes receivable that are each 
less than $25,000 may be combined into a single amount;
    (ii) Particulars of investment in affiliated companies and other 
investment in form and detail required in Schedules 205 and 206 of 
annual report R-1, or Schedules 1001 and 1002 of annual report R-2, as 
appropriate;
    (iii) Particulars of balances in Accounts 741, Other Assets, and 
743, Other Deferred Changes, in form and detail required in Schedule 216 
of annual report R-1 or Schedule 1703 of annual report R-2, as 
appropriate;

[[Page 690]]

    (iv) Particulars of loans and notes payable in form and detail 
required in Schedule 223 of annual report R-1, or Schedule 1701 of 
annual report R-2, as appropriate, as well as information as to bank 
loans, including the name of the bank, date and amount of the original 
loan, current balance, maturities, rate of interest, and security, if 
any;
    (v) Particulars of long-term debt in form and detail required in 
Schedules 218 and 219 of annual report R-1 or Schedules 670, 695, 901, 
902 and 1702 of annual report R-2, as appropriate, together with a brief 
statement concerning each mortgage, pledge, and other lien, indicating 
the property or securities encumbered, the mortgage limit per mile, if 
any, and particulars as to priority;
    (vi) Particulars of balance in Account 784. Other Deferred Credits, 
in form and detail required in Schedule 225 of annual report R-1 or 
Schedule 1704 of annual report R-2, as appropriate; and
    (vii) Particulars as to capital stock in form and detail required in 
Schedules 228, 229, and 230 of annual report R-1 or Schedule 690 in 
annual report R-2, as appropriate.
    (9) As Exhibit 9, a copy of carrier applicant's report to its 
stockholders or report of the trustee for each of the 3 years preceding 
the year in which the application is filed.
    (10) As Exhibit 10, applicant's most recent annual income statement 
certified by applicant's independent public accounts if available, and a 
spread sheet showing unaudited monthly and year-to-date income statement 
data for the calendar year in which the application is filed in account 
form similar to that required in column (a) of Schedule 300 of annual 
report R-1 or R-2 as appropriate. For those months preceding and ending 
upon the date of the unaudited balance sheet presented in Exhibit 8, the 
income statement shall be reported on an actual basis and so noted. For 
those months between the dates of the unaudited balance sheet and the 
filing of the application, the income statement data shall be reported 
on an estimated basis and so noted and shall be submitted in conjunction 
with corresponding estimated month-end balance sheets. For those months 
between the date of the application and the end of the year income 
statement data shall be presented on a forecasted basis and so noted and 
shall be submitted in conjunction with a forecasted balance sheet as at 
the year end.
    (11) As Exhibit 11, spread sheets showing for each of the four years 
subsequent to the year in which the application is filed, both before 
and after giving effect to the proceeds of the assistance required in 
the application:
    (i) Forecasted annual income statement data in account form and 
detail similar to that required in column (a) of Schedule 300 of annual 
report R-1 or R-2 as appropriate, including the subaccounts comprising 
line 2 (railway operating expenses), as specified by lines 64, 92, 105, 
159, 166, and 180 of Schedule 320; and
    (ii) Forecasted year-end balance sheets in account form and detail 
similar to that required in Schedule 200 of annual report R-1 or R-2, as 
appropriate. These spread sheets shall be accompanied by a statement 
setting forth the bases for such forecasts.
    (12) As Exhibit 12, a spread sheet showing changes in financial 
position for the year in which the application is filed in account form 
and detail as required in Schedule 309 of annual report R-1 and R-2 as 
appropriate as follows:
    (i) For that period ending on the date of the unaudited balance 
sheet in Exhibit C, based upon actual data; and
    (ii) For that period from the balance sheet date to the end of the 
year, based upon estimated and forecasted data.
    (13) As Exhibit 13, a spread sheet showing forecasted changes in 
financial position for each of the four calendar years subsequent to the 
year in which the application is filed, both before and after giving 
effect to any funds requested in the application and including a 
statement showing the bases for such estimates, in account form and 
detail as required in Schedule 309 of the annual Report R-1 for Class I 
railroads in similar form and detail for Class II railroads.
    (14) As Exhibit 14, a statement showing actual cash balance at the 
beginning of each month and the actual cash receipts and disbursements 
during each month of the current year to the date of the latest balance 
sheet furnished as

[[Page 691]]

Exhibit 8, together with a monthly forecast (both before and after 
giving effect to use of proceeds from the proposed loan) for the balance 
of the current year and the year subsequent thereto.
    (15) As Exhibit 15, a general statement setting forth the facts as 
to estimated prospective earnings and other funds upon which applicant 
relies to repay the loan.
    (b) The following exhibits are required as to the transaction.
    (1) As Exhibit 16, copies of correspondence from all, and not less 
than three, lending institutions or security underwriters to which 
application for the financing has been made, evidencing that they have 
declined the financing unless guaranteed by the Secretary or specifying 
the terms upon which they will undertake the financing without such 
guarantee.
    (2) As Exhibit 17, specimens, or forms where specimens are not 
available, of all securities to be pledged or otherwise issued in 
connection with the proposed loan; and in case of mortgage, a copy of 
the mortgage or indenture.
    (3) As Exhibit 18, copies of the loan agreement entered into, or to 
be entered into, between the Trustee and lender, and of any agreements 
or instruments executed or be executed in connection with the proposed 
loan.

[44 FR 23852, Apr. 23, 1979]

Sec. 250.3  Fees.

    On date of final payment of the loan guaranteed by the Secretary 
pursuant to application filed under this part, the applicant carrier or 
the trustee, if still in existence, shall pay, or cause to be paid, to 
the Administrator as a guarantee fee such amount as the Administrator 
hereafter may determine and prescribe as necessary to cover the 
administrative costs of carrying out the provisions of the Emergency 
Rail Services Act of 1970.

Sec. 250.4  Execution and filing of application.

    The following procedure shall govern the execution and filing of the 
application:
    (a) The original application shall bear the date of execution and be 
signed with ink by or on behalf of the trustee and the lender. Execution 
on behalf of the trustee shall be by the trustee or trustees having 
knowledge of the matters therein set forth. Persons signing the 
application on behalf of the trustee and lender, respectively, shall 
also sign a certificate in form as follows:

    (Name of official) ------------------------ certifies that he is the 
------------------------ (title of official) of the --------------------
---- (name of carrier or lender); that he is authorized on the part of 
said applicant to sign and file with the Administrator this application 
and exhibits attached thereto; that he has carefully examined all of the 
statements contained in such application and the exhibits attached 
thereto and made a part thereof relating to the aforesaid --------------
-- (name of carrier or lender); that he has knowledge of the matters set 
forth therein and that all such statements made and matters set forth 
therein are true and correct to the best of his knowledge, information, 
and belief.
                                                                  (Date)

    (b) There shall be made a part of the original application the 
following certificate by the Chief Accounting Officer of the carrier:

    (Name of officer) ------------------------, certifies that he is --
---------------------- (title of officer) of --------------------------
------ (name of carrier applicant); that he has supervision over the 
books of account and other financial records of the carrier and has 
control over the manner in which they are kept; that such accounts are 
maintained in good faith in accordance with the effective accounting and 
other orders of the Interstate Commerce Commission; that he has examined 
the financial statements and supporting schedules included in this 
application and to the best of his knowledge and belief said statements 
accurately reflect the accounts as stated in the books of account; and 
that, other than the matters set forth in the exceptions attached to 
such statements, said financial statements and supporting schedules 
represent a true and complete statement of the financial position of the 
carrier applicant and that there are no undisclosed assets, liabilities, 
commitments to purchase property or securities, other commitments, 
litigation in the courts, contingent rental agreements, or other 
contingent transactions which might materially affect the financial 
position of the carrier applicant.
                                                                  (Date)

    (c) The original application and supporting papers, and six copies 
thereof for the use of the Administrator shall

[[Page 692]]

be filed with the Administrator, Federal Railroad Administration, 
Department of Transportation, Washington, DC. Simultaneously, one copy 
of the application and supporting papers shall be filed with the 
Secretary of the Interstate Commerce Commission, Washington, DC. Each 
copy shall bear the dates and signatures that appear in the original and 
shall be complete in itself, but the signatures in the copies may be 
stamped or typed. If unusual difficulties arise in the furnishing of any 
of the exhibits required in Sec. 250.2, the carrier applicant or the 
lender, upon appropriate showing and with the consent of the 
Administrator, may file a lesser number.
    (d) In the event the furnishing of exhibits in the detail required 
by Sec. 250.2 is shown by the applicant or applicants to be unduly 
burdensome in relation to the nature and amount of the loan, the 
Administrator may modify the requirements of said section. In addition, 
the Administrator may waive or modify any requirement of this part upon 
good cause shown, or make any additional requirements he deems 
necessary.

Sec. 250.5  General instructions.

    (a) If the application is approved by the Administrator and the 
Secretary of Transportation and the latter agrees to make the guarantee, 
the following documents will be required for deposit with the 
Administrator before the transaction is closed:
    (1) Final opinion by counsel for the Trustee to the effect that he 
is familiar with the corporate powers of the carrier applicant and the 
orders of the reorganization court; that the Trustees of the carrier 
applicant are authorized to execute and deliver the certificate or other 
obligations evidencing the same, and to pledge and hypothecate any 
securities pledged as collateral; that the certificate or other 
obligations so executed and so delivered constitute the valid and 
binding obligations of the Trustees of the carrier that the certificate 
or other obligations of the Trustee will be treated as an expense of 
administration and receive the highest lien on the railroads property 
and priority in payment under the Bankruptcy Act, and that the lender 
and the Secretary will obtain a lien on any security involved of the 
rank and priority represented by the Trustee. Such opinion shall also 
cover the priority and lien of each item of the collateral offered.
    (2) Certified copies of the reorganization court orders and decrees 
authorizing the Trustee to execute and deliver the certificates or other 
obligations and to give the security under and according to the terms of 
the loan and guarantee as prescribed by the Administrator. Such order or 
orders of the reorganization court shall specify that trustee 
certificates, guaranteed by the Secretary as to payment of principal and 
interest, shall be treated as an expense of administration and receive 
the highest lien on the railroad's property and priority in payment 
under the Bankruptcy Act.
    (3) Unexecuted copies of the foregoing documents will be delivered 
to the Administrator 3 business days prior to closing.
    (b) The guarantee by the Secretary of a loan pursuant to an 
application filed as provided in this part should not be construed as 
relieving a carrier from complying with applicable provisions of section 
20a of the Interstate Commerce Act (49 U.S.C. 20a) in relation to the 
issuance of Trustee certificates.




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