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Encyclopedia of Cleveland History

ERIE LACKAWANNA, INC.

ERIE LACKAWANNA, INC.

ERIE LACKAWANNA, INC., was the company established in 1982 to liquidate the assets of the former Erie Lackawanna Railway. The liquidation, wholly centered in Cleveland, has been called one of the most successful in the annals of American business history.

When the ERIE-LACKAWANNA RAILROAD was formed in 1960 by the merger of the Erie and the Delaware, Lackawanna & Western, the headquarters of the new railroad company was located in Cleveland. In 1968 the line was renamed the Erie Lackawanna Railway when it was merged into the Norfolk & Western. It retained, however, a separate identity. The Erie Lackawanna Railway Co. filed for bankruptcy in June 1972, citing sharply rising costs and damage to its line from Hurricane Agnes. In 1976 all rail assets were transferred to CONRAIL. On 1 Dec. 1982, a new corporation, Erie Lackawanna Inc., came into existence to liquidate the remaining assets of the railroad and make distributions to creditors. The corporation, a financial entity and not a railroad, operated under the approval of U.S. District Court. There were several years of legal battles with the government, the IRS, and with Conrail in the corporation's efforts to reorganize (actually liquidate) the Erie's assets. The sale of 1,000 parcels of land and rail lines that Conrail did not acquire, as well as other former Erie property, such as tugboats, brought in more than $95 million.

Erie Lackawanna, Inc., headed by Harry A. Zilli, Jr., made its first liquidation distribution in Nov. 1988, and its last distribution in Jan. 1992. Creditors and bond holders were fully repaid. After this, the corporation remained only nominally in existence, primarily to settle certain claims.