There are certain aspects of everyday life that are simply part of the landscape. These are always there and therefore taken for granted as being unassailable institutions without common business concerns. Municipalities and contractors for municipalities might be viewed as businesses that should not run into financial trouble, but in Texas and across the country more and more of these entities are having issues that lead to a business bankruptcy and reorganization under Chapter 11. Both the private and public sector need to be aware of how filing for Chapter 11 bankruptcy might be beneficial.
A toll road operator connecting two cities for a 41-mile stretch in Texas has filed for Chapter 11 bankruptcy. The LLC is jointly owned by a company in Spain and one in San Antonio. In 2006, an agreement for $1.3 billion allowed the company to accrue the financing, oversee the development and operate the highway. This highway has the highest speed limit — 85 miles-per-hour — in the U.S. The road began construction in 2009 and was opened three years later. Once it was opened, the operators could collect tolls.
This road did not meet the expectations in regards to traffic and did not bring in the money that was hoped for. Because of that, the operator began to run low on cash. The Spanish company was also a part owner of a toll road in Indiana that, in 2014, also had to move forward with a bankruptcy. The idea of privatizing toll roads was lauded in both states as a progressive maneuver to reduce costs. The operator claims to have approximately $1.3 billion in liabilities.
Any business whether it is small, medium-sized or large can run into financial difficulty for a variety of reasons. The economic climate can be affected by factors out of one’s control or mistakes could be made when it comes to how the business is being operated. Some businesses are viable but just need to restructure debts to continue operations. A reorganization through filing for Chapter 11 bankruptcy can help these businesses get back on stronger financial ground.
There is nothing to be embarrassed about considering Chapter 11. In fact, it is often the best decision a business owner can make. Businesses in Texas that are struggling to meet their financial obligations should seek information as to which option is best and if Chapter 11 if a viable alternative.
Source: Reuters, “Update 1-Texas toll road files for bankruptcy as cash runs low,” Tom Hals, Mar. 2, 2016