There have been several books on this subject. In addition to The Men Who Loved Trains, mentioned above, I also recommend The Fallen Colossus by Robert Sobel.
I worked for the U.S. Railway Association after "conveyance" (transfer of the rail assets to Conrail). I was there from 1978 through 1980. USRA had three jobs. The first was to choose the bits and pieces of Penn Central, Erie Lackawanna, CNJ, Reading, etc. that could be used to make up a viable rail system. The second was to provide rehabilitation funds to Conrail, and to ensure those funds were wisely used. The third was to value the assets selected for conveyance, pay the price to the bankrupt estates, and then litigate the value in a special court with lawyers for the bankrupt estates.
USRA valued the conveyed rail assets at roughly $500 million. The litigation was ultimately settled for about $7 billion, so some shareholders of the bankrupt estates (depending on when they bought the stock) made out quite nicely. In addition, USRA provided about $2.5 billion in financial assistance to Conrail, in return receiving stock and bonds which were held by the government until Conrail was sold in a public stock offering in 1984.
All of the rail assets not selected by USRA for conveyance, along with all of the non-rail assets (Buckeye Pipeline, Sperry Rail Service, non-railroad real estate, etc.) remained with the bankrupts to be disposed as they saw fit. Some rail trackage not conveyed was operated as "subsidized light density lines" (LDLs) for a few years under a transitional Federal program administered first by USRA and later (until ended by the Reagan administration) by FRA. States would nominate LDLs for continued operation, and in most cases a private "designated operator" provided service.
What is now Amtrak's Northeast Corridor was conveyed to Conrail in 1976, but with the understanding that it would go to Amtrak as soon as USRA put a value on it. This was done, and it was transferred to Amtrak in late 1977. Amtrak paid Conrail by simply forgiving trackage rights charges Conrail would have otherwise paid. This period of free use ended in 1982, at which time Stanley Crane re-routed most rail freight off the NEC and ended electric freight operation.
Randy Resor, aka "NellieBly" passed away on November 1, 2013. We honor his memory and his devotion to railroading at railroad.net.