BANGOR – Bangor and Aroostook Railroad System can continue discussions with possible buyers without having to be under the watchful eye of a federal bankruptcy court judge.

Terms of a possible sale of all or some of the railroad system could be announced on or before Sept. 7, according to B&A’s attorney.

In a telephone conference call with attorneys Tuesday, U.S. Bankruptcy Court Judge James B. Haines Jr. said there was not enough evidence to suggest that B&A owners may be attempting to sell its properties for prices below their actual value.

That was the concern of one of B&A’s largest creditors, Helm Financial Group of San Francisco, which sought an emergency order from Haines to oversee all business transactions. Helm wanted Haines to ensure that any transactions were in the best financial interests of creditors, B&A’s employees, and the public.

Helm’s request was unusual because B&A is not under bankruptcy court protection. If it were, then Haines automatically would oversee all financial transactions, including the sale of property.

But B&A has not filed for Chapter 11.

In a separate court action, however, the judge has been asked by three B&A creditors to involuntarily place B&A under Chapter 11 protection.

Helm, along with United Tank Car of Chicago and Ebenezer Railcar of West Seneca, N.Y., are owed about $7.1 million in lease payments on locomotives and railcars. Helm alone is owed more than $5.6 million.

That court action is pending, with B&A needing to tell Haines why it shouldn’t be forced into Chapter 11.

In Tuesday’s proceeding, Dan Cummings, an attorney for Helm, said B&A has been selling assets without disclosing for how much to the creditors. The sales, he said, “would equate to a dismantling of the business.”

But Keith Cunningham, an attorney for B&A, said the creditors’ interests are protected without the bankruptcy court’s intervention because most of them have liens against the railroad’s assets.

He said there was no evidence to support the claim that the railroad system’s assets were being sold for below market value.

In the last couple of months, B&A said that Rail World Inc., Wheeling Corp., and several independent investors, as part of a rail management and investment consortium, were negotiating to buy the B&A Railroad System.

B&A President Frederic Yocum Jr. has acknowledged that the railroad’s operations will be broken up, and the pieces will be sold. It is unlikely that the system will be sold as one entity.

In February, B&A said it had assets of $92.8 million and debts of about $50.4 million, according to documents filed in Maine District Court.

B&A Railroad System is owned by Iron Road Railways of Virginia. Besides Bangor and Aroostook Railroad, the system includes Canadian American, Quebec Southern and Northern Vermont railroads, as well as Logistics Management Systems.