[Code of Federal Regulations]

[Title 49, Volume 4]

[Revised as of October 1, 2005]

From the U.S. Government Printing Office via GPO Access

[CITE: 49CFR250.5]



[Page 799]

 

                        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. 250.5  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.