The Société de vélo en libre-service seeks protection under the Bankruptcy and Insolvency Act
MONTREAL, Jan. 20, 2014 /CNW Telbec/ - The Mayor of Montréal, Denis Coderre, and the Chairman of the Executive Committee, Pierre Desrochers, today announced that, following the city's action, the Société de vélo en libre-service submitted a notice of intention to seek protection under the Bankruptcy and Insolvency Act.
This legislation will offer protection to the enterprise, so that it may restructure its business and finances. The Société de vélo en libre-service will therefore remain in operation during this period as well as maintain services to its members.
"When our administration took over at City Hall, we were given a grim financial portrait of the Société de vélo en libre-service. The city has supported the Société financially for several years, particularly through a loan of $37 million and an $11 million loan guarantee, of which $6.4 million are engaged. Because the Société de vélo en libre-service cannot meet its financial obligations nor find a viable short-term solution, and because of the uncertainty regarding the possible recovery of the sums injected by the city, we have decided to act now rather than later. It is not up to the taxpayers to assume the financial risk involving a business plan. Our duty is to protect the interests of Montrealers, and this is what we are doing today," said Denis Coderre.
The Société de vélo en libre-service must seek protection under the Bankruptcy and Insolvency Act, because certain clients withheld large payments totalling $5.6 million. This has affected cash flow and led to insolvency. These actions were caused by delays in the development of its systems solution. No job losses are expected at this time.
"This decision has been carefully considered. We represent the taxpayers, and injecting additional funds to maintain the Société de vélo en libre-service was out of the question. If BIXI can be saved, it is through the Bankruptcy and Insolvency Act. Waiting any longer would only increase the financial risk for the city, which would be unacceptable," added Mayor Coderre.
Everything will be done, so that the 2014 BIXI Montréal season will not be affected. Over the next few days, the Société de vélo en libre-service will meet with city representatives to plan BIXI's upcoming season and examine the best scenarios to maintain city investments in the Société. Those who have purchased their BIXI membership at the end of 2013 for the 2014 season will be able to use the service as soon as the season opens.
"We will do everything possible to maintain the BIXI service for Montrealers and visitors, while protecting the interests of taxpayers. Although Montréal has served as an incubator for BIXI's development, the city's mission is not to replace private enterprise. For this reason, every effort will be made to sell BIXI's international activities," said Mr. Desrochers.
SOURCE Ville de Montréal - Cabinet du maire et du comité exécutifFor further information:
Louis-Pascal Cyr, Director of Communications
Office of the Mayor and Executive Committee