The bankruptcy trustee for Auto-Train Corp. is seeking approval of a $5 million government-guaranteed loan to provide operating cash for the Washington-based railroad.
Trustee Murray Drabkin, who is directing the reorganization of Auto-Train, asked the federal bankruptcy court Thursday for permission to apply to the Secretary of Transportation for the $5 million loan guarantee.
Railroads that file for reorganization in bankruptcy are eligible for government-guaranteed loans under a federal Emergency Rail Services law passed in 1970.
Drabkin's petition does not specify how the $5 million would be used.
The court is expected to rule on the request next week.
Yesterday, bankruptcy Judge Roger M. Whalen issued a temporary restraining order preventing Chesapeake & Potomac Telephone Company from cutting off phone service to Auto-Train.
Whalen also has agreed to a proposal by Drabkin to provide some relief for Auto-Train passengers, some of whom have been waiting for as long as six months or more for refunds from the company.
Auto-Train owes an estimated $500,000 to passengers who made and paid for reservations, then turned in their tickets and canceled their trips.
Under the plan approved by the court, the passengers still will have to wait if they want cash, but they instead can get tickets for future travel on Auto-Train. The amount owed the passenger by Auto-Train will be credited against the price of the tickets, which are not transferable.