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It’s official: Toll Road files bankruptcy

 

In filing for bankruptcy, the company that operates the Indiana Toll Road has reignited an old debate about the controversial privatization of the Toll Road in 2006. …
Debt-ridden ITR Commission Co., a spawn of the Spanish-Australian company Cintra-Macquarie, on Sunday filed for Chapter 11 bankruptcy in U.S. Bankruptcy Court in Chicago in a prepackaged plan to restructure its approximate $6 billion debt.

The General Assembly narrowly voted for the lease, allowing then-Gov. Mitch Daniels to sign a contract with the company in 2006 to exchange a lump-sum payment of $3.8 billion for a 75-year lease of the road that runs between the Illinois and Ohio state lines.
But the toll revenue failed to meet the company’s expectations, as traffic volume fell short of predictions.

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Thanks to Neil21.

Comments

  1. BC’s P3 culture means that could not happen here. The revenue risk is seldom – if ever – transferred to the private sector partner. So when revenues do not match up to forecasts, as on the Port Mann and Golden Ears bridges, the private sector partner gets paid anyway – a dreadful use of scarce public sector resources in my opinion. The only way to get the benefits of market incentives is if the penalties are also preserved.

  2. Really, if you’re going to build roads, then the Indiana structure where the private operator is taking the revenue risk is the way to go. Should we care that a company went bankrupt? No. This may still be wasting land on motordom, but at least it’s not also wasting public dollars.

  3. The State of Indiana should offer the bond holders 50% on the coupon value of the bonds and take the road back. The users of the road will be better served if the State operates it — yes, even Indiana.

  4. It’s a function of debt. Doesn’t mean the road is bad nor the idea of private roads in general or this road specifically. Could also be they paid too much for it.

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