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Bixi Files For Bankruptcy
Written by Boston Biker on Jan 20
Bixi the company that runs the bike share in Montreal filed for bankruptcy. They have ties to the Alta “family” of bike share companies the company that runs Hubway. It looks like the system will continue in Montreal, but that it will be a public utility, rather than a private company.
Bixi was not supposed to cost them a cent but Montreal taxpayers could be on the hook for tens of millions of dollars, the city admitted Monday.
The bike-sharing service’s debt is almost $50 million.
Citing Bixi’s “grim financial portrait,” Mayor Denis Coderre announced he had forced the city-controlled non-profit company to enter bankruptcy protection.
Though he wants Bixi out of the international bike-sharing business, Coderre said he would like to see Bixi continue to roll in Montreal.
“We will have Bixi in Montreal this summer,” he said, noting many users have purchased memberships. Keeping Bixi operating in the city in 2014 could cost taxpayers a further $1.5 million.
Coderre was less definitive about whether Montrealers will have access to bike-sharing beyond 2014.
Bixi is unable to neither “meet its financial obligations nor find a viable short-term solution,” Coderre said. That was causing “uncertainty regarding the possible recovery of the sums injected by the city.”
Bixi owes the city $31.6 million on a $37-million city loan. Montreal also guaranteed a line of credit on which Bixi owes $6.4 million.
That means Montreal taxpayers could be stuck with a $38-million bill, though the city hopes a sale of the international part of the business will cut that amount.
Bixi also owes its suppliers $9 million.
In total, then, Bixi’s total debt is at least $47 million.
Bixi is also embroiled in multimillion-dollar lawsuits with a former software supplier. (via)
It would seem that the American side of the company is unaffected, and that it might even be sold off to balance some of the debts, but we will have to wait and see if there is any fall out from this news here in Boston. Judging from the article above, it looks like their big mistake was expanding into the American market.
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