Penn Central Goes Belly Up

(Wikipedia) ... The American financial system was shocked when after only two years of operations, the Penn Central Transportation Company was put into bankruptcy on June 21, 1970. It was the largest corporate bankruptcy in American history at that time. Although the Penn Central Transportation Company was put into bankruptcy, its parent Penn Central Company was able to survive. The PC's bankruptcy was the final blow to long-haul private-sector passenger train service in the United States. The troubled company filed proposals with the ICC to abandon most of its remaining passenger rail service, causing a chain reaction among its fellow railroads. In 1971, Congress created Amtrak, a government corporation, which began to operate a skeleton passenger service on the tracks of PC and other U.S. railroads.
The PC continued to operate freight service under bankruptcy court protection. After private-sector reorganization efforts failed, Congress nationalized the Penn Central under the terms of the Railroad Revitalization and Regulatory Reform Act of 1976. The new law folded six northeastern railroads, the Penn Central and five smaller, failed lines, into the Consolidated Rail Corporation, commonly known as Conrail. Continued