Liquidated: Colorado Railcar, now US Railcar

[icgsteve]

Given that this was a Rader company and given what we know about the finance's at CRM I don't think that we can assume that CRM still owns the design. They might have been sold in order to rise cash. If the design is still owned by CRM then the Bankruptcy court will sell them to the highest bidder. It will take some months before we have an idea from operation if the four that were built are any good, but if they are the design might be worth something.

On a wider note, the fact that the only American DMU provider was the tiny poorly capitalized and poorly managed CRM speaks to the industry's evaluation of the possible DMU market in light of the FRA regulations. Rader thought that he smelled an opportunity, that the majors were wrong, but so far it looks like the majors are right. Looks like as long as the FRA remains hostile to the DMU concept there will be no market worth building for.

[george matthews]

Rader thought that he smelled an opportunity, that the majors were wrong, but so far it looks like the majors are right. Looks like as long as the FRA remains hostile to the DMU concept there will be no market worth building for.

That's a pity because outside the US, that is the main type of vehicle in use.

[Tadman]

It's worth mentioning that in this current business climate, banks are pulling loans from any business that isn't madly spinnin off cash. We aren't talking about businesses in the red, we are talking about any business, black or red, that isn't completely smelling of roses. It has more to do with the banks and their shakiness or lack of liquidity than the debtor.

That said, I cannot imagine how CRM made much money ever.

[icgsteve]

It's worth mentioning that in this current business climate, banks are pulling loans from any business that isn't madly spinnin off cash. We aren't talking about businesses in the red, we are talking about any business, black or red, that isn't completely smelling of roses. It has more to do with the banks and their shakiness or lack of liquidity than the debtor.

That said, I cannot imagine how CRM made much money ever.

Both of Rader's companies (CRM and Grandluxe) were doomed before the credit marrkets crashed, they were mismanaged and were under capitalized even back when money was easy to get. The ones I feel for are the employees, the ones who believed in Rader and the stuff that they were building. It will comes as a kick in the teeth if the four DMU's that got built turn out to be a good product, that might have been very successful as we pour money into upgrading transit infrastructure.

[Jishnu]

It will comes as a kick in the teeth if the four DMU's that got built turn out to be a good product, that might have been very successful.

Being somewhat familiar with the stuff that they built, I would indeed be very very pleasantly surprised if such were to come to pass.

The good thing is now with the distraction out of the way we can start working towards a real credible modern DMU design from a better capitalized car company.

[AlanB]

To throw in one Amtrak-related aspect to this story, the Colorado Railcar DMU was the car that then Amtrak president David Gunn was pressuring the state of Vermont to purchase for Amtrak-run state service. CRC made all kinds of claims about the savings that would be realized by using the cars, but when neither CRC nor Amtrak would back those claims contracturally, the state passed. Sounds like the state of Vermont made a good decision.

Actually David Gunn wanted the DMU's for service on the Sprinfield shuttle and on the Hiawatha line. David never envisioned them for the Vermonter AFAIK.

After David was given the boot, and with no funding forthcoming from Congress to fulfill David's dream, someone at Amtrak had the bright idea of selling the DMU idea to Vermont as a way for Vermont to reduces it's contribution to Amtrak.

[westr]

I believe last summer CRC split from GLJ in toto. Rader owned GLJ at the time it went out.

Colonel, while such varies amongst jurisdictions, absent being sold to an unrelated party in an "arms-lrngth" transaction, I would not be surprised if those assets were "brought into" the Bankrupt's Estate.

Actually I think the GrandLuxe Express was always legally a completely separate operation from Colorado Railcar, and while Rader owned both, the bankruptcy of one should have no effect on the other (though Rader may have complicated things by moving money from CRM to GrandLuxe, I think he personally will be held liable for that money). According to a 2007 Amtrak news release: "GrandLuxe Holdings, LLC, is a Colorado company owned by Thomas G. Rader, its Chairman and CEO. Rader also owns Colorado Railcar Manufacturing LLC, but the two companies are not related." According to this very unofficial page, the bidding process for the GrandLuxe train is complete and there were "five or six" bids. I would expect that the winning bidders will take delivery before CRM's bankruptcy is settled, so in any case it's the money, not the cars, that would be at stake.

Given that this was a Rader company and given what we know about the finance's at CRM I don't think that we can assume that CRM still owns the design. They might have been sold in order to rise cash. If the design is still owned by CRM then the Bankruptcy court will sell them to the highest bidder. It will take some months before we have an idea from operation if the four that were built are any good, but if they are the design might be worth something.

I wonder how much of the design Colorado Railcar itself actually owns. A lot of Colorado Railcar's old website is still online, and according to the old Company Information page: "Founder and COLORADO RAILCAR President, Tom Rader maintains exclusive patents on the Ultra Dome, the futuristic railcar he designed "from the trucks up"." Some of those patents, or new ones, may also apply to the DMU. If Rader himself personally holds those patents and just licensed them to his company, he could still have them and other patents and design copyrights when the dust settles. Remember it is Rader's company that is bankrupt, not Rader himself (and seeing as how he was reportedly receiving a salary of $37,000 a MONTH(!) as CEO of Colorado Railcar, I don't see how he could personally be bankrupt.) He could still come back to try again, though I'm not sure if anyone would be willing to do business with him anymore.

[Kaback9]

What he should do is sell his designs to Bombardier or some other North American company and let them try to sell it with their own components.

[icgsteve]

Actually I think the GrandLuxe Express was always legally a completely separate operation from Colorado Railcar, and while Rader owned both, the bankruptcy of one should have no effect on the other (though Rader may have complicated things by moving money from CRM to GrandLuxe, I think he personally will be held liable for that money).
.

I have not found the definitive statement on this, but i did see it claimed that Grandluxe contracted CRM do all of the work on the cars till almost the end, and the Grandluxe never paid in full. In that sense the two companies are connected in bankruptcy if this is so. Given the statements to the effect that Rader was dishonest it might be impossible at this late date to go back and figure out who owes whom what.

[westr]

Actually I think the GrandLuxe Express was always legally a completely separate operation from Colorado Railcar, and while Rader owned both, the bankruptcy of one should have no effect on the other (though Rader may have complicated things by moving money from CRM to GrandLuxe, I think he personally will be held liable for that money).
.

I have not found the definitive statement on this, but i did see it claimed that Grandluxe contracted CRM do all of the work on the cars till almost the end, and the Grandluxe never paid in full. In that sense the two companies are connected in bankruptcy if this is so. Given the statements to the effect that Rader was dishonest it might be impossible at this late date to go back and figure out who owes whom what.

That's no more of a connection than that between any debtor and creditor. Grandluxe may owe CRM money, but it is only liable for that amount of money. Beyond that amount, Grandluxe's assets, or the proceeds from the sale of those assets, can't be used to cover CRM's debts. If Grandluxe filed for bankruptcy, the proceeds from the sale of its assets would go to its creditors, and CRM would get, at most, whatever the books say Grandluxe owes it. (The courts might have fun determining that amount.) The rest would go elsewhere. The money that CRM got from Grandluxe might go straight to some of CRM's creditors, but legally that's a seperate, unrelated transaction.

As far as I know, Grandluxe hasn't filed for bankruptcy, and I think that means if CRM's creditors want whatever Grandluxe owes CRM, they'll have to take Grandluxe to court, just as they would any other non-bankrupt entity that might owe CRM money. And they might do that, but it'd probably take months to get settled. I have no idea how much debt Grandluxe has, but it's possible that Rader expects to make enough from the sale of the train for Grandluxe to settle all its debts and end up in the black without ever declaring bankruptcy.

[Tadman]

Anybody know what kind of work CRM did to allow a salary of $37k/month to Tom Rader? That works out to $440k/year. I rode past the plant on 5/6 last week, and it was closed up tight. However, there was one ARR bilevel and about 20 tank cars nearby. They were all parked in a small yard / grouping of sidings between the plant and BNSF main. I have no idea if the tanks were related to CRM or just parked there by BNSF for other nearby reasons. Could CRM be in the freight railcar repair biz?

But back to the main question, CRM must have been handling annual revenue volumes of somewhere over $10m if not more to pay Rader $440k/yr.

[John_Perkowski]

Mr Dunville,

Pardon me for being a bloody fool, but 5/6 run into Denver on the Burlington. Lupton, as I read the map for the official website of CRM, is on the Union Pacific line to Fort Morgan and Cheyenne. Now I thought at one point Rader had a plant out by Hudson (on one trip in the 90s I certainly recall seeing a Budd dome in NP colors there...) but that isn't the main place of business...

[icgsteve]

Mr Dunville,

Pardon me for being a bloody fool, but 5/6 run into Denver on the Burlington. Lupton, as I read the map for the official website of CRM, is on the Union Pacific line to Fort Morgan and Cheyenne. Now I thought at one point Rader had a plant out by Hudson (on one trip in the 90s I certainly recall seeing a Budd dome in NP colors there...) but that isn't the main place of business...

Rader put his build business though a bankruptcy in Nov 1997, and at that point a Denver plant was closed and the equipment was sold of to partially satisfy the creditors....probably the one you are thinking of.
http://books.google.com/books?id=Od-eV9 ... &ct=result

[hemihead]

It will comes as a kick in the teeth if the four DMU's that got built turn out to be a good product, that might have been very successful.

Being somewhat familiar with the stuff that they built, I would indeed be very very pleasantly surprised if such were to come to pass.

The good thing is now with the distraction out of the way we can start working towards a real credible modern DMU design from a better capitalized car company.

Please let me know what company makes a "real credible modern DMU design" and actualy follows through with building it other than CRM will you ? I'll be interested to see one that's fully FRA compliant.

[hemihead]

I was consistently amused by the Colorado Railcar equipment performance "studies" that were signed off by a lady with the same last name as the founder of the company, without any indication whether she was his wife, his daughter, etc.
I am consistently amused by people like yourself that post such things as wondering whether said "lady" was Tom Rader's daughter, wife, girfriend or mistress.......who cares ? The fact is, that at the time the only real life data available was from testing at TTCI in Pueblo. You have to start somewhere and I'm sure interested buyers would have been informed of such.
MX