With little hope of reviving the WHR, a winding up order was made on 1 June 1944, at the instigation of Caernarvonshire County Council, and Mr Alwynne Thomas, a Llandudno accountant, was appointed as liquidator.
In a third transaction, WHLR (1964) Ltd purchased from British Rail a piece of land in the corner of the Gelert's Farm site, which included a short (about 90 feet) section of the WHR trackbed immediately north of the Cambrian crossing.
By 1980 it had established a depot and workshops at Gelert's Farm and built a short length of line from a station at Porthmadog (WHHR), running along the course of the Beddgelert siding to Pen y Mount (about 1 mile).
But within WHLR (1964) Ltd, there were some who began to have concerns that once the statutory protection the trackbed enjoyed had gone, the council might then decide to use the parts not leased to the '64 Co. for non-railway purposes, such as the much talked-about footpaths or road improvement/bypass schemes.
Another issue of concern was that claims for adverse possession ("squatters' rights") of the land (which would have been numerous) would have gained more validity (and become practically impossible to fight) had an abandonment order been made.
In effect, the only benefit of the LRO remaining in place was that it preserved the integrity of the trackbed as a "statutory undertaking" – ensuring that it could only be used for railway purposes, protecting it from claims of "adverse possession" and preventing it from being broken up and sold piecemeal.
[10] In the meantime the WHLR (1964) Ltd board called an extraordinary general meeting for members to vote on the proposed terms of the lease on the Pen-y-Mount to Pont Croesor trackbed and also the alternatives to the deal with the council – including financial reconstruction of the 1922 company.
[18] Effectively the continued existence of the LRO only served to protect the integrity of the empty trackbed and anybody wishing to rebuild the WHR – even the original WHLR Company – would have to obtain new powers to do so.
For the time being, having failed to gain the required 75% majority and with little or no prospect of being able to persuade the three local authorities to sell any of their debentures, TCL and WestCo had little choice but to suspend their attempt at financial reconstruction.
At around this time, it is likely that the OR contacted the solicitors representing the FR, requiring to know the identity of the secret bidder, as he would need to declare all the interested parties at the forthcoming High Court hearing.
WHLR (1964) Ltd had, by this time, obtained planning permission to rebuild the WHR from Pen-y-Mount to Pont Croesor, and had submitted a draft Light Railway Order jointly with GCC for that section.
The Ffestiniog Railways' plan was to start the project at Caernarfon, rather than at the original WHR northern terminus at Dinas, because of the link to a town which already had a major tourist attraction already: the famous castle.
To counter this, while the inquiry was still on-going, the FR entered into a legally binding agreement with GCC, to the effect that if they gained a transfer order, they would go through with re-building the WHR and would commence work within five years.
The civil engineering of the new line was undertaken by local contractors, while FR volunteers laid the whole of the 25 miles of new track from Caernarfon to Porthmadog, sometimes with welcome help from outside, ranging from the president and vice-presidents of the Permanent Way Institution to students from Imperial College.
European rules are that the EU will, in depressed areas such as North Wales, contribute pound-for-pound for money raised by the promoters of the scheme and for volunteer effort given in practical ways.
Delays were caused by a legal dispute with the North Wales Trunk Road Agency about repair costs for a retaining wall at Britannia Bridge and the difficulty of accommodating two trains at once in Porthmadog Harbour Station.
This is now part of the Caernarfon to Porthmadog line: WHR Ltd have reverted to running their short service to Pen y Mount, in conjunction with an excellent museum visit and miniature railway.
Fittingly, in October 2005, it was the volunteers of the original revival company who laid the first lengths of track in the final (southern) phase, an emotional moment for many of that organisation's long-standing members.
The original NWNGR goods shed has been restored to railway use, principally as a workshop; it is also used for the annual Gwŷl Gwrw or Beer Festival (access only on foot or by train!)
The work of reconstruction fell into two parts; first, the preparation of three miles (5 km) of trackbed with a granite ballasted surface, stations, and the realignment of the Lôn Eifion cycleway and footpath alongside, was undertaken by civil engineering contractor John Mowlem plc in a contract worth £750,000 in December 1996.
This major work started on 6 January 1997 and in addition involved also the strengthening and waterproofing of two river bridges, Pont Seiont at Caernarfon and the viaduct over the Afon Gwyrfai at Bontnewydd.
However, the gang that came from WHR (Porthmadog) as part of their "Civils Week programme" set a remarkable record, for the most track laid in a single day, of 13 lengths, which stood for eight years.
For the restoration of WHR (Caernarfon), the Ffestiniog Railway imported not only South African steam engines (some were built in Manchester by Beyer Peacock and Company as recently as 1958) but also the rails and steel sleepers on which to run them.
The greater part of the rail came with a job lot of steel sleepers, clips, screws, bolts and fishplates, all to several different patterns, which had to be sorted by WHR and FR volunteers before they could be used.
After the company had fixed items in the snagging list, provisional approval was given for the line to open for a six-week trial period subject to the receipt of a Light Railway Order, which was granted on 9 October 1997.
The derelict station building was carefully surveyed and tidied to industrial archaeology standards by the Welsh Highland Heritage Group and secured for rebuilding, which was undertaken in 2011.
Posford Duvivier (Caernarfon office) were retained as civil engineering consultants and supervisors for the specialist contractors, principally Jones Bros. Ruthin (Civil Engineering) Co Ltd. All tracklaying for the six miles (10 km) of railway was again undertaken by direct labour with significant volunteer involvement but in addition direct labour and volunteers undertook the formation construction, ballasting and drainage work on almost half the length of trackbed.
A ceremony to launch the start of Phase 4 construction took place at the south end of Rhyd Ddu station site on 1 August 2005, with a ribbon cut by the Rt Hon Rhodri Morgan AM, First Minister of the Welsh Assembly Government.
Walkers and environmentalists claimed that an important, albeit unofficial footpath would be lost, but there was no real justification for this given that the Fisherman's Path remains usable alongside the railway trackbed.
In the winter of 2011–12, the station site at Porthmadog Harbour was extended seawards to make room for independent working of the two railways and so that passengers could have a cross-platform exchange from FR to RhE or vice versa.