[Code of Federal Regulations]
[Title 49, Volume 4]
[Revised as of October 1, 2007]
From the U.S. Government Printing Office via GPO Access
[CITE: 49CFR250.5]

[Page 857-858]
 
                        TITLE 49--TRANSPORTATION
 
       CHAPTER II--FEDERAL RAILROAD ADMINISTRATION, DEPARTMENT OF 
                             TRANSPORTATION
 
PART 250_GUARANTEE OF CERTIFICATES OF TRUSTEES OF RAILROADS IN 
 
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

[[Page 858]]

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.