Bike-sharing programs take a hit with Bixi bankruptcy

Summary:The manufacturer behind more than a dozen bike-sharing programs in the U.S., Canada and UK has been plagued by financial woes. This latest problem could leave Montreal taxpayers with a multi-million-dollar bill.

Bixi, the Montreal-based manufacturer that supplies more than a dozen bike-sharing programs in the U.S., Canada and UK with GPS-enabled bicycles and solar-powered docking stations, has filed for bankruptcy. 

Bixi, also known as Public Bike Sharing Co., says it will remain in operation during the restructuring and will maintain its services to its users. The company also said in its bankruptcy announcement that the 2014 season in Montreal will not be affected. 

Bixi is in nearly C$50 million in debt, reported the Montreal Gazette. The government-controlled non-profit company owes Montreal C$31.6 million on a C$37 million loan as well as C$6.4 million on a guaranteed line of credit. Bixi also owes its suppliers about $9 million. 

Bixi, which designs and builds the software-equipped bikes and solar-powered docking stations for bike-sharing systems operated by third parties, has a long history of financial problems stemming from software glitches and legal disputes. In 2011, the City of Montreal approved a $108 million bailout package to keep Bixi in business. But that influx of cash wasn't enough to keep the company afloat.

Bixi's latest problems appear to be caused, in part, by New York and Chicago's decision to withhold payments over delays in software upgrades, according to the Montreal Gazette. Alta Bicycle Share, which operates New York's Citi Bike service as well as seven other programs in the U.S. and Melbourne, Australia, has reportedly told Bixi it wants $11 million in damages for software delays. 

Bixi's international expansion brought high-tech bike-sharing systems to big cities. But the expansion could come at a cost to Montreal's taxpayers, who assumed the financial risk of the city-controlled company's international aspirations. One option would be to sell the international arm, assuming there's a willing buyer. 

Montreal officials seems committed to keeping the program alive—in Montreal. What that means for programs in other cities that use the Bixi system is unclear. Third-party operators like Alta will have to find an alternative to the Bixi system, especially if a new owner doesn't materialize. 


Thumbnail image: Flickr user James D. Schwartz

This post was originally published on Smartplanet.com

Topics: Innovation

About

Kirsten Korosec has written for Technology Review, Marketing News, The Hill, BNET and Bloomberg News. She holds a degree from Northwestern University's Medill School of Journalism. She is based in Tucson, Arizona. Follow her on Twitter.

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