The bike share program Bixi owes $47 million to various creditors and has filed for bankruptcy protection. The City of Montreal is owed a bulk of the debt.
The Public Bike Sharing Company, who run Bixi, owes Montreal $31.6 million from a $37 million loan. It also owes the city an additional $6.4 million from a guaranteed line of credit. In total, the taxpayers of Montreal may end up on the hook for a $38 million tab from the struggling bike-share company.
The company began operations in May 2009 and has expanded to cities in Canada and abroad. Bankruptcy protection will give it security from creditors for 30 days, although the protection can be extended for up to six months.This arrangement may give the company time to restructure or sell some parts of the program to pay off debts.
Company managers told CBC they hope to sell part or all of the company to level debts. They will meet with city officials later in the week to try to form a plan to help the company move forward in paying off debts and coming up with a workable business strategy.
“This decision has been carefully considered,” said Montreal’s mayor Denis Coderre. “We represent the taxpayers, and injecting additional funds to maintain the [public bike share] was out of the question. If Bixi can be saved, it is through the Bankruptcy and Insolvency Act. Waiting any longer would only increase the financial risk for the city, which would be unacceptable.”
Some cities owe Bixi money that they have refused to pay because of delays to promised software updates. New York City and Chicago reportedly owe the company a combined $5.6 million.
The Toronto arm of the program was recently absorbed by the city because of similar financial struggles.
Montreal city staff anticipate the bike share will continue to operate for 2014 season, although that could change in the coming weeks as Bixi navigates bankruptcy protection.