On this day in 1977, the Chicago, Milwaukee, St. Paul, and Pacific Railroad filed for bankruptcy. The firm represented the Milwaukee’s shareholders and, after the bankruptcy’s successful conclusion, the reorganized debtor, Heartland Partners. At the time of the Milwaukee’s bankruptcy filing, the line carried 18,000 commuters daily and operated a 9,251-mile system in 17 states, according to the Chicago Tribune. And it was the second Chicago-based railroad to file for bankruptcy within three years; the Chicago, Rock Island & Pacific Railroad – its largest shareholder also represented by Jenner & Block – filed in 1974.
On this day in 1988, Dan Murray was appointed to serve as trustee in the bankruptcy of Chicago Missouri & Western Railway Company following the death of the first trustee, former Illinois Governor Richard B. Ogilvie. As trustee, Dan supervised operations of the railroad, skillfully preserving passenger rail service. In 2011, Dan received the W. Graham Claytor Award For Distinguished Service To Passenger Rail Transportation for his outstanding work as trustee.
On this day in 1982, the U.S. Supreme Court ruled in favor of our client Henry Crown, the largest bond holder in the Chicago, Rock Island and Pacific Railroad Co., in Railway Labor Executives' Assn. v. Gibbons. The case arose out of the railroad’s bankruptcy reorganization, which commenced on March 17, 1975. In 1980 -- three days before the bankruptcy court would order the railroad abandoned, with no obligation on the part of the railroad to pay employee labor protection out of its assets -- Congress passed special legislation called the Rock Island Railroad Transition and Employee Assistance Act (RITA), which required the railroad to pay employee benefits of up to $75 million, to the detriment of its secured bond holders, including Col. Crown. In oral argument before the Supreme Court, Dan Murray argued that RITA represented an uncompensated taking of private property and an unconstitutional non-uniform law in bankruptcy. The Supreme Court declared RITA “repugnant to … the Bankruptcy Clause of the Constitution” because it was a non-uniform bankruptcy law. In its unanimous opinion authored by then-Justice William Rehnquist, the Court called RITA “nothing more than a private bill such as those Congress frequently enacts under its authority to spend money.”