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Future I-77 toll affiliate’s missed projections land it in Chicago bankruptcy court

Charlotte Bankruptcy Lawyer Bryan W. Stone of Arnold & Smith, PLLC answers the question “What is Chapter 11 Bankruptcy?”

 

The operator of a 157-mile toll road across northern Indiana has declared bankruptcy. The operator, owned by affiliates of the Macquarie Group, Ltd. and Ferrovial SA, intends to restructure its operations and has already filed a creditor-supported restructuring plan in a Chicago bankruptcy court.

I-77 Sign Charlotte Mecklenburg Debt Attorney North Carolina Bankruptcy LawyerAlthough traffic on the toll road increased every year between 2008 and 2013, the increase was lower than projected, forcing the operator to devote ever-increasing amounts of income to debt payments. Fernando Redondo, chief executive officer of the Spain-based ITR Concession Co., blamed “the global economic recession” for stifling interstate commerce and depressing interstate trucking activity, which accounts for a major part of the toll road’s revenues.

ITR didn’t try to cut its toll-road customers any slack during the recession. Instead, it increased the cash toll for passenger cars from thirty cents to ten dollars. Rates for semi-trailer trucks were increased from one dollar to just under forty dollars for a full trip. Travelers who utilize the electronic toll system have to pay $4.65 for a full trip.

Indiana state toll officials are watching the bankruptcy closely. They want to make sure the operator’s bankruptcy does not affect highway functions, force toll hikes or put state funds at risk. The state entered into a lease agreement with the operator in 2006 that allows the operator to operate the toll road and collect tolls for 75 years. In exchange, the operator paid the state $3.8 billion.

Charlotte-area transportation planners are also watching the bankruptcy closely. ITR Concession is affiliated with Cintra, the company that won approval to begin construction on Interstate-77 toll lanes that will run north from Charlotte’s Brookshire Freeway to Mooresville. The cost of the 26-mile interstate widening is projected to be $650 million. Cintra will operate the toll lanes and collect tolls for 50 years.

Local political leaders voiced their concerns about the pricing of tolls during public debates held regarding the Interstate-77 proposal in August. The only study made public on the issue of toll amounts provided that drivers could pay a one-way cost of eleven dollars to use the road.

Cornelius Commissioner Dave Gilroy asked Cintra representatives if the operator planned to charge up to forty dollars roundtrip on the I-77 tolls, as it does on its northern Indiana route. Project manager Javier Tamargo couldn’t say, replying “Likely pay? Who knows?” Huntersville Commissioner Sarah McAuley was willing to take the operator’s word. “I think it will be at a competitive rate,” she said.

The toll rates will be set after Cintra provides projections on traffic. Of course, the operator’s projections regarding traffic on its northern Indiana toll road were wrong—so wrong that it had to drastically increase its toll rates and seek bankruptcy protection. But that won’t happen here, said Patrick Rhode, the vice president for corporate affairs in Cintra’s Texas office. “We have a lot of belief in our forecasting.”

If you find yourself needing the services of a Charlotte, North Carolina bankruptcy attorney, please call the skilled lawyers at Arnold & Smith, PLLC today at (704) 370-2828 or find additional resources here. As professionals who are experienced at handling all kinds of bankruptcy matters, our attorneys will provide you with the best advice for your particular situation.

 

 

About the Author

Bryan 1Bryan Stone is a Partner with Arnold & Smith, PLLC, where he focuses his practice on all aspects of bankruptcy, including: Chapter 7, Chapter 11, Chapter 13, home loan modifications and landlord-tenant issues.

A native of Macon, Georgia, Mr. Stone attended the University of Georgia, where he earned a BBA in Banking and Finance, and Wake Forest University School of Law, where he obtained his law degree.

Following law school, Mr. Stone relocated to Charlotte, where he currently serves as Chair of “Bravo!” – a young professionals organization associated with Opera Carolina – and founded the University of Georgia Alumni Association of Charlotte.

In his spare time, Mr. Stone enjoys perfecting his barbeque skills for the annual “Q-City BBQ Championship” and playing softball in the Mecklenburg County Bar softball league.

 

 

Sources:

http://www.charlotteobserver.com/2014/09/24/5196204/affiliate-of-i-77-toll-company.html#.VCL0dvldVS0

http://www.bloomberg.com/news/2014-09-22/indiana-toll-road-seeks-bankruptcy-as-traffic-declines.html

http://www.nwitimes.com/news/local/govt-and-politics/state-closely-monitoring-toll-road-operator-bankruptcy/article_31a5a4aa-c752-5560-9285-a5c8fc9b5f22.html

http://www.wcnc.com/story/news/local/2014/08/21/how-much-will-i-77-tolls-cost/14408687/

 

 

Image Credit:

“I-77”. Licensed under Public domain via Wikimedia Commons – http://commons.wikimedia.org/wiki/File:I-77.svg#mediaviewer/File:I-77.svg

 

 

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