Bixi owes $50M, files for bankruptcy protection
Popular bike-sharing service gets taken over by City of Montreal
Bixi has applied for protection from its creditors and the City of Montreal is taking over the local operation of the popular bike-sharing service.
Montreal Mayor Denis Coderre made the announcement Monday afternoon.
“If Bixi can be saved, it’s through the Bankruptcy and Insolvency Act," Coderre said.
Bixi is in bankruptcy. We have to admit that.- Richard Bergeron, Projet Montreal
The company that owns Bixi — the Public Bike System Company, known in French as the Sociétéde vélos en libre-service (SVLS) — owes $50 million to various creditors, including the City of Montreal.
Coderre said rather that sinking more money into the SVLS, a private company, the city would take over Bixi's Montreal assets. He said they are worth approximately $11 million.
"Bixi is in bankruptcy. We have to admit that," said Projet Montreal Leader Richard Bergeron, who supported Coderre's decision to take over the service.
Bixi has been expensive for Montreal
In 2011, Montreal's city council approved a $108-million bailout package for the program to cover a budget shortfall. That included a $37-million loan to cover Bixi's deficit and another $71 million in loan guarantees to export and develop the system abroad.
Michel Philibert, the interim CEO of the SVLS, said the company will work with the City of Montreal to ensure the service rolls forward this summer.
"In the next few days we’re going to initiate a process and we’ll need to work with the City of Montreal to ensure the 2014 season of Bixi, and the second objective is to protect the value of the investment the City of Montreal made in SVLS," Philibert said.
The mayor said he believes Bixi was, and continues to be, a good idea and a valuable public service, but that the company's financial problems forced him to act now rather than later.
Coderre said he wasn't happy to hear about the seriousness of Bixi's financial problems upon taking over as mayor of Montreal in November.
“Bixi is a good idea," Coderre said. "I want there to be a Bixi season this summer.”
$1.5M loss predicted for 2014
City officials said they expect a $1.5-million loss on Bixi this year because of restructuring. Still, Coderre said, he believes the service can be viable.
Bixi said cash-flow problems began when it tried to develop new proprietary technology for international clients.
Persistent delays and problems with the technology prompted many clients to withhold payments — Chicago and New York refused to pay out $5.6 million to Bixi because of the prolonged snags in the development of each city's bike-sharing service.
The STM, Montreal's public transit authority, would not comment on today's announcement.