Canadian Company Behind Bike-Sharing Programs Seeks Bankruptcy Protection | NY Times

OTTAWA — The Canadian company that designs and builds the bicycles and supporting technology for bike-sharing systems around the world, including those in New York and London, sought bankruptcy protection on Monday.
Denis Coderre, the mayor of Montreal, told reporters that a failed, if ambitious, international expansion plan and a financial dispute with some United States cities, including New York, had forced the move by Société de Vélo en Libre-Service, a nonprofit company, better known as Bixi.
The move will allow the company, which was spun off from the city of Montreal, to continue to operate in the short term. But untangling the financial and legal mess surrounding its operations will most likely be a more protracted business.
Bixi’s financial statements from 2012 have still not been released. In September, the city of Montreal’s auditor general expressed doubt about its financial viability. On Jan. 15, Montreal demanded that Bixi make a long overdue 31.6 million Canadian dollar ($29 million) payment on a 37 million dollar loan from the city. The city has also guaranteed a 6.4 million Canadian dollar bank line of credit, and Bixi owes suppliers about 9 million Canadian dollars.
Mr. Coderre, who recently took office, said that the city had no choice but to press Bixi for payment. “It is not up to taxpayers to assume the financial risk involving a business plan,” he told a news conference.
The city is giving the company an additional 1.5 million Canadian dollars to allow operations to continue.
When the former mayor, Gérald Tremblay, who left office in 2012 because of a corruption scandal, presided over the start of Bixi in 2009, international sales were supposed to finance the system. The opposite proved to be true.
Its system distinguished itself from earlier bicycle-sharing systems by usingsolar power and docking stations that relied on wireless networks for communications. That allows them to be easily lifted onto trucks and moved without connecting utilities. The aluminum bicycles, also designed in Quebec, proved to be exceptionally robust, although the city’s auditor and others say they are too expensive.
In addition to New York, Bixi systems have been installed in Washington; Boston; Chicago; Minneapolis; the region around San Francisco; Aspen, Colo.; Chattanooga, Tenn.; and Columbus, Ohio.
Except for Montreal, Ottawa and Toronto, where Bixi is also in financial trouble, Bixi does not operate those systems. Alta Bicycle Share, which operates the system in New York and several other places, did not respond to requests for comment. A message on its telephone answering system said the company was looking for a permanent head office site in Portland, Ore.
A dispute over software updates, Montreal said on Monday, has caused New York and Chicago to withhold payments totaling 5.6 million Canadian dollars.
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