Penn Central Transportation Company. Office of the Trustees.
The Penn Central Transportation Company filed for Chapter 77 bankruptcy protection on June 21, 1970, the largest corporate bankruptcy to that date. Two days later, federal judge John P. Fullam was selected by lot to preside over the sprawling nine-year reorganization process. On July 22, 1970, Judge Fullam appointed four bankruptcy trustees to serve as intermediaries between the court and the company's management and assume the powers normally held by the Board of Directors elected by the stockholders. The leading trustee was Jervis Langdon, Jr., a respected railroad executive formerly with the Baltimore & Ohio and most recently CEO of the Chicago, Rock Island & Pacific. Of the four trustees, Langdon was to have hands-on management. W. Willard Wirtz, Secretary of Labor in the Kennedy and Johnson Administrations, represented the interests of the railroad unions. Richard C. Bond was the former head of the Wanamaker's department store chain, and an important figure in the Philadelphia business community. George P. Baker was Dean of the Harvard Business School. Robert W. Blanchette, who had been counsel to the New Haven railroad trustees, was named Counsel to the Trustees on July 29.
On January 2, 1974, President Nixon signed the Regional Rail Reorganization Act of 1973, which created a special government corporation the United States Railway Association which was charged with preparing a plan to preserve the viable portions of the rail network. The USRA was governed by a board representing the various affected interest groups and staffed by a group of experts from the Department of Transportation who were free to work outside the existing regulatory structures of the Interstate Commerce Commission and state commissions.
On May 2, 1974, Judge Fullam ruled that the company could not be reorganized within the terms of the Bankruptcy Act, meaning that the only real option would be a forced sale of assets to Conrail under the "Three R" Act. From this point on, the trustees' role was largely limited to protecting the interests of the company's creditors in negotiating a solution with the USRA, including the valuation to be placed on the assets to be sold to Conrail.
After the sale of a large portion of the rail assets to Conrail on April 1, 1976, the trustees spent another two years devising a reorganization plan under the Bankruptcy Act. Judge Fullam approved the final plan on August 17, 1978. On October 24, 1978, the reorganization was completed by the merger of the Penn Central Company (holding company) into the subsidiary Cleveland Technical Center, Inc., and the immediate merger of that company with the Penn Central Transportation Company to form Penn Central Corporation.
The Penn Central trustees began work with a relatively limited staff, but this increased as reorganization problems increased in complexity. In July 1972, A. M. Schofield, a skilled operating officer, was named Vice President - Reorganizational Planning, and David Kelso McConnell of the Legal Department was named Administrative Officer to the Trustees. McConnell's title was changed to Administrative Officer & Counsel in October. Another lawyer, Carl Helmetag, Jr. joined the staff as General Counsel - Reorganization on March 1, 1973.
Schofield returned to the Operating Department as Senior Vice President - Operations on February 1, 1974, and Nelson S. Sharfman of the consulting firm of Wyer, Dick & Co. became Vice President - Reorganization Planning. William H. Tucker, formerly an ICC Commissioner and most recently in the Public Affairs - Public Relations Department, became Senior Executive Representative - Trustees at Boston. Welborn E. Alexander, a career traffic officer, became Assistant Vice President - Reorganization Staff on August 1, 1974, but he was transferred to Vice President - Marketing on September 5, following the accidental death of his predecessor, George R. Wallace.
General Counsel Paul R. Duke became Vice President - Law to advise the trustees on April 1, 1975, and Carl Helmetag replaced Duke as head of the Legal Department. David Kelso McConnell became Special Counsel to the Trustees, and Assistant Vice President - Budget Planning Ernest R. Varalli also joined the trustees' staff. William H. Tucker was named Vice President - Boston on August 5, 1975, to direct the valuation process. As the sale deadline loomed and valuation took center stage, J. Richard Tomlinson of the consulting engineering firm of Louis T. Klauder was appointed Executive Vice President - Reorganization. As the planning work was completed, the trustees' staff contracted.
From the description of Records, 1967-1975. (Hagley Museum & Library). WorldCat record id: 164036049
- Railroads--Passenger traffic
- Railroads--Commuting traffic
- Railroad stations
- Railroad passenger cars
- Corporate reorganization
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