Flint and Pere Marquette Railroad - Receivership

Receivership

On July 1, 1879, the F&PM went into receivership, owing $1,200,000 in unpaid interest on bonds with bonded interest accumulating at a rate of $385,000 a year. Gross revenues had declined every year since the Panic of 1873, a situation exacerbated by the crash of the lumber market in July 1877. The company remained in receivership until September 30, 1880, when it was reorganized as the Flint and Pere Marquette Railroad. Under the reorganization plan the F&PM issued $6,500,000 in preferred stock. No common stock was to be issued to holders of certificates of old common stock until five consecutive dividends of 7 per cent had been paid on preferred stock. In the event, this never occurred, as there were only two consecutive years (1883 and 1884) in which a 7 per cent dividend was declared on preferred stock.

While in receivership the company built two new lines in 1879: a narrow gauge branch from Cole to Mount Pleasant, 14.5 miles (23.3 km), as the Saginaw and Mount Pleasant Railroad (converted to standard gauge in 1884), and a standard gauge branch from Clare to Harrison, 16.8 miles (27.0 km), as the Saginaw and Clare County Railroad.