Plan for the reorganization of the New Hope and Ivyland Railroad Company pursuant to section 77 of the Bankruptcy Act, as amended, approved.

Joseph M. Gindhart for the debtor.

Robert L. Starer for himself.

Donald Blanken for a creditor.

J. Shane Creamer, Gordon P. MacDougall, Philip P. Kalodner, Edward Munce, and Susan M. Shanaman for the Commonwealth of Pennsylvania and the Pennsylvania Public Utility Commission.

REPORT OF THE COMMISSION

DIVISION 3, COMMISSIONERS TUGGLE, DEASON, AND BREWER

BREWER, Commissioner:

Exceptions to the report and recommended order of the Administrative Law Judge have been filed by the Public Electric Company (Electric Company) and Robert L. Starer to which the New Hope and Ivyland Railroad Company and the Commonwealth of Pennsylvania and the Pennsylvania Public Utility Commission, jointly, replied.

Our conclusions differ in some respects from those of the Adminstrative Law Judge. We will adopt as our own the Administrative Law Judge's description of the applicants, positions of the parties, facts pertinent there to, and certain financial data, and will be repeated only to the extent necessary for clarity of discussion.

'This report also embraces Finance Docket No. 26943, Robert W. Guthrie, Trustee, New Hope and Ivyland Railroad Company-Abandonment of Entire Line; and Finance Docket No. 27034, Robert L. Starer-Acquisition and Operation-New Hope and Ivyland Railroad Company.

The New Hope and Ivyland Railroad Company, hereinafter referred to as NH&I or the debtor, on June 5, 1970, filed a petition with the District Court of the United States for the Eastern District of Pennsylvania stating that it was unable to pay its debts as they matured and that it desired to effect a plan of reorganization under section 77 of the Bankruptcy Act, 11 U.S.C. 205. The petition was approved on the same day.

The debtor, on February 17, 1971, as amended on May 30, 1972, filed a plan of reorganization, which was dismissed for lack of prosecution. Another plan for reorganization of the debtor was filed on February 29, 1972, by Robert L. Starer. Also, pursuant to a court directive, an application to abandon the entire line of railroad was filed by the trustee on December 8, 1971, and, as a concomitant to the abandonment application, an application was filed on the same day by Starer to acquire and operate the railroad upon its abandonment, as an alternative to his plan of reorganization.

HISTORY AND DESCRIPTION OF PROPERTIES

The debtor was formed in 1965, for the purpose of acquiring and operating the line in interstate or foreign commerce following its purchase from the Reading Railroad. The line is located entirely within Bucks County, Pa., and extends from New Hope to Ivyland Borough, a distance of 16.7 miles. NH&I is not affiliated with any other carrier subject to our jurisdiction. It provides freight service between Ivyland and New Hope, and operates a tourist service between New Hope and Buckingham Junction, a distance of about 7.1 miles, using steam locomotives, in the summers. Commuter service is not regularly provided.

The debtor has operated at a loss in each year of its existence. To improve its financial position it sold the underlying fee of its entire rights-of-way to the Philadelphia Electric Company for $199,500. The purchase agreement provided for a 99-year lease back to the NH&I at a yearly net rental of $6,000, payable in advance quarterly. NH&I retained the title to 20 parcels of trackside property as well as all ties, tracks, ballast, bridges, and other improvements. Two independent appraisals of debtor's realty were separately prepared. The appraisal conducted for debtor's trustee values the property between approximately $233,000 and $240,000. The value assigned by Starer's appraiser is $110,000 lower. The disparity was not reconciled on the record.

Since the commencement of operations, NH&I has had no more than two paid employees, relying instead upon unpaid volunteers to operate and maintain the road.

FINANCIAL STRUCTURE

The debtor's balance sheet, as of June 5, 1970, the date of entry into reorganization, shows total assets of $451,234, consisting of investment in properties, less depreciation, $428,911; total current assets, $7,952; and total other assets, $14,371. The liabilities on the same date totaled $307,185, consisting of current liabilities, $304,788 and long-term liabilities, $2,396. Net stockholder equity was $144,050. By March 31, 1972, debtor's balance sheet deteriorated somewhat with total assets dropping to $395,307 comprised of current assets, $9,361; investment in properties, less depreciation, $370,580; and other assets, $15,365. Liabilities on March 31, 1972, totaled $366,683 with current and long-term liabilities increasing to $363,193 and $3,490, respectively. The net stockholders' equity showed a marked decrease to $28,623.

CLAIMS

Pursuant to section 77(c)(7) of the Bankruptcy Act, the court ordered 10 classes of claims as follows:

The only secured creditor is the Southeastern Pennsylvania Development Fund (Fund) to whom the debtors owes approximately $177,000, plus interest, which, as of the date of bankruptcy, totaled $20,205.

PROPOSED PLAN OF REORGANIZATION

The plan filed by the debtor, as stated above, was dismissed for want of prosecution and need not be discussed herein.