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Title 45, RailroadsRelease 119-110

§746 Certificates of Value

Title 45 › CHAPTER 16 — REGIONAL RAIL REORGANIZATION › SUBCHAPTER III — CONSOLIDATED RAIL CORPORATION › § 746

Last updated Sep 22, 2026|Official source

Summary

When the Corporation must give securities to the special court, the Association must give matching certificates of value at the same time. The U.S. Secretary promises to pay those certificates, and the promise is backed by the full faith and credit of the United States. That guarantee is final unless both sides made the same factual mistake, or the certificate holder or the transferor committed fraud or gave a major false statement. A separate series of certificates is made for each railroad or related person who transfers rail properties, and the number and timing of certificates match the series B preferred stock given for those transfers. Certificates are to be redeemed on December 31, 1987, unless the Association’s Board and Finance Committee pick an earlier date. Each certificate’s cash payout equals its base value on the redemption date minus the fair market value of the one series B preferred share and the share of common stock tied to that certificate, minus any cash dividends already paid on those shares, and minus any payments the transferor got from later sales or leases divided by the number of certificates. The base value starts with the court’s net liquidation value for the transferor, subtracts other chapter benefits, adds any court-ordered compensation for unconstitutional losses, adds interest from transfer to redemption compounded yearly at 8 percent, and then divides by the number of certificates. Stock fair market value is the average market price over 120 consecutive trading days ending not less than 20 and not more than 40 trading days before redemption; if no market exists, three valuation experts pick the value by majority vote. Congress may appropriate whatever sums are needed for the Secretary to meet these U.S. obligations.

Full Legal Text

Title 45, §746

Railroads, Source: USLM XML via OLRC

(a)General
On the date when the Corporation is required to deposit securities with the special court pursuant to section 743(a)(1) of this title, the Association shall deposit with the special court the certificates of value of the Association required by this section. The Secretary shall guarantee the payment of all certificates of value delivered in accordance with this subchapter. All guarantees entered by the Secretary under this section shall constitute general obligations of the United States of America for the payment or redemption of which its full faith and credit are pledged. Such guarantees shall be valid and incontestable except as to mutual mistake of fact or as to fraud or material misrepresentation by the holder of such certificates or the transferor of rail properties to which certificates of value of any series so guaranteed are issued.
(b)Number and distribution
A separate series of certificates of value shall be issued to each railroad in reorganization in the region and each person leased, operated, or controlled by such a railroad that transfers rail properties to the Corporation or a subsidiary thereof. The number of certificates of value of each series to be deposited pursuant to subsection (a) shall be equal to the number of shares of series B preferred stock of the Corporation which are required to be deposited by the Corporation with the special court, pursuant to section 743(a)(1) of this title in exchange for the rail properties transferred to the Corporation or a subsidiary thereof by such transferor. Certificates of value of the appropriate series shall be distributed by the special court, pursuant to section 743(c)(4) of this title, at the same time to the same transferors, and in the same numbers of units as shares of such series B preferred stock are distributed to such transferor.
(c)Redemption
(1)Certificates of value, of any series, shall be redeemed by the Association on December 31, 1987, or on such earlier date as the Board of Directors of the Association and the Finance Committee jointly may determine and specify.
(2)Each certificate of value of each series shall be redeemable for an amount, payable in cash, equal to its base value on the redemption date, minus—
(A)the sum of the fair market value of the series B preferred stock applicable to such certificate, the fair market value of the common stock applicable to such certificate, and all cash dividends theretofore paid on any such series B preferred stock and on any such common stock; and
(B)any sums paid to a transferor of rail properties to whom such series of certificates of value was issued resulting from sales or leases by the Corporation of properties transferred to it by such transferor divided by the number of certificates of value distributed to such transferor.
(3)The number of shares of series B preferred stock and common stock applicable to each certificate of value of any series, pursuant to paragraph (2) of this subsection, shall be—
(A)one share of series B preferred stock (adjusted to reflect any stock splits, stock combinations, reclassifications or similar transactions affecting the number of shares of outstanding series B preferred stock following the date of distribution pursuant to section 743(c)(4) of this title); and
(B)the number of shares of common stock determined by dividing the total number of shares of common stock distributed pursuant to section 743(c)(4) of this title to the transferor receiving such series of certificates of value (adjusted to reflect any stock splits, stock combinations, reclassifications, or similar transactions affecting the number of shares of outstanding common stock following the date of distribution pursuant to section 743(c)(4) of this title) by the total number of certificates of value in the series so distributed to such transferor.
(4)The base value of each certificate of value of any series shall be the value obtained by (A) taking the net liquidation value, as determined by the special court, to which the transferor to whom such series of certificates of value is issued is entitled by virtue of transfers of rail properties, under section 743(b)(1) of this title to the Corporation or a subsidiary thereof; (B) subtracting the value of other benefits provided under this chapter, as determined by the special court; (C) adding such amount, if any, as the special court may determine shall be required after taking into consideration compensable unconstitutional erosion, if any, in the estate of a railroad in reorganization, or of a railroad leased, operated, or controlled by such a railroad, which the special court finds to have occurred during any bankruptcy proceeding with respect to such railroad; (D) adding interest from the transfer date to the redemption date to be compounded annually at a rate of 8 percent per annum; and (E) dividing the resulting value by the number of certificates of value of such series distributed to such transferor. In determining such base value, the special court shall give due weight and consideration to the finding of the Association as to the net liquidation value to which each transferor is entitled by virtue of conveyances of rail properties under section 743(b)(1) of this title. For purposes of this paragraph, the term “rail properties” includes all rights with respect to employee benefit plans transferred and assigned to the Corporation pursuant to section 743(b)(6) of this title. Net liquidation value with respect to such rights shall be determined after taking into account all obligations finally transferred or assigned to the Corporation pursuant to such section.
(5)The fair market value of series B preferred stock and of common stock of the Corporation shall be determined in accordance with regulations prescribed by the Association, on the basis of the average price of each such security in the primary established market in which such securities are traded over a period of 120 consecutive trading days ending not less than 20 nor more than 40 trading days preceding the redemption date, or, in the case of a security for which there is not an established trading market, on the basis of the fair market value thereof as determined by the majority vote of three experts in the valuation of securities, one to be selected by the Association, one to be selected by the directors of the Corporation elected by the holders of the security to be valued, and one to be selected by the two first selected.
(d)Authorization of appropriations
There are authorized to be appropriated to the Secretary such sums as are necessary to discharge the obligations of the United States arising under this section.

Legislative History

Notes & Related Subsidiaries

Editorial Notes

Amendments

1976—Subsec. (c)(3)(A). Pub. L. 94–248, § 2, substituted “adjusted to reflect” for “without regard to”. Subsec. (c)(3)(B). Pub. L. 94–248, § 3, inserted provisions relating to adjustment of number of shares of common stock to reflect any stock splits, stock combinations, etc.

Statutory Notes and Related Subsidiaries

Abolition of Special Court, Regional Rail Reorganization Act of 1973, and

Transfer of Functions

Special court abolished and all jurisdiction and functions transferred to United States District Court for District of Columbia, see section 719(b)(2) of this title. Abolition of United States Railway Association and

Transfer of Functions

and Securities See section 1341 of this title. Applicability of National Environmental Policy ActApplication of National Environmental Policy Act to actions of Commission not affected by title VI of Pub. L. 94–210, see section 619 of Pub. L. 94–210, set out as a note under section 791 of this title.

Reference

Citations & Metadata

Citation

45 U.S.C. § 746

Title 45, Railroads

Last Updated

Sep 22, 2026

Release point: 119-110