Some factoids about PC:
Yes, both New York Central and PRR owned a lot of valuable real estate. Yes, this valuable property did not accompany the railroad operations assets into the post bankruptcy organization (into Conrail). Yes, much of the non-railroad holdings of an investment firm owned by the same company that owned the new railroad made their way into the books of American Premier Underwriters in Ohio.
But no one stood to gain from the gigantic failure of this very prominent firm -- no one!
The Penn Central Company was a holding company. This company owned Penn Central Transportation (the railroad operating company). PC Co. also owned The Pennsylvania Company, a firm set up to hold the investments of PRR from many years earlier. It was earnings from the investments of The Pennsylvania Co. (such as PRR's shares of N&W sold before the merger) that went into the diversifications much vilified in the press and in politically motivated revelations and conflagrations.
Financial experts did not advise PC to take cash from the valuable holdings of Pennsylvania Co. to prop up the railroad, nor were they required to do so after the merged railroad failed. They tried in vain to stave off the inevitable by leveraging their good standing with financial folks, but they could not spend the nest egg. It would have been a huge waste of many years of earnings from investment (and re-investment). Spending was way out of control with the doomed railroad company at this point. Money has a tendency to disappear, you know, if not guarded carefully.
Some of the investments of The Penn Co did not pan out, but gains exceeded losses by far.
Yes, both The Central and The Pennsy sold real estate to prop up their operations (I guess we all know about Madison Square Garden and the beautiful station that once occupied that site). PRR could have never paid the dividends it did for so many years without that self-consuming source of cash. This selling of assets continued into the Conrail era, mostly because the revenues (as I've stated before here) did not support the value of the holdings. Use it well or sell it is the mantra.
Penn Central shareholders (the people who owned the company, after all) certainly did not profit from the failure. The value of shares went to near zero. You can buy cancelled PC certificates on Ebay worth more as wall hangings than the actual shares were worth after the bankruptcy. Assets were sold to pay creditors a pittance on the dollar. Many creditors got nothing!
Senior executives did not gain. Although many able managers went on to full, successful careers in railroading (because they were, after all, talented), a few key decision-makers were cast out in shame.
Nobody won -- except maybe the lawyers who litigated all of the claims against the estate.