The foreclosure took place and the property was purchased on July 26, 1871, by Gen. George B. McClellan, William Butler Duncan and Allen G. Thurman.
In May 1874, the Atlantic and Great Western was again leased by the Erie, at terms very generous to the A&GW and its backer James McHenry.
On December 10, 1874, the new president of the Erie, Hugh J. Jewett, repudiated the lease and the company went into the hands of a new receiver, J. H. Devereaux.
This action led to a series of lawsuits between McHenry and Jewett which brought shame to both companies.
On January 10, 1880, the property was again sold at foreclosure and was reorganized as the New York, Pennsylvania and Ohio Railroad.