SH-130 Tollroad to be bankrupt by June 2014

[10scoachrick]

Originally Posted by wxf848

The state already owns the road and doesn't need to buy it. The development agreement gives the company a lease. With the company in bankruptcy, TxDOT has the option to foreclose and take the road back without compensation. If they cancel the agreement and take back the road, they could run it as a regular toll road, run it as a non-toll road, or lease it to another company. I've always liked the idea of leasing it back to the same company, rebranded for legal purposes, and then that company can collect the tolls without the debt that's crushing the current incarnation. That's a great scam.

The Sports Authority folks might want a piece of that action!

Sports Authority files for bankruptcy protection

[Novacek]

Originally Posted by wxf848

With the company in bankruptcy, TxDOT has the option to foreclose and take the road back without compensation.

What's your source on that?

I think the creditors in the bankruptcy might take issue with that.

[wxf848]

Originally Posted by Novacek

What's your source on that?

I think the creditors in the bankruptcy might take issue with that.

The Facility concession agreement.
State Highway 130 Information

Section 17.1.1.13 says that a voluntary case seeking liquidation or reorganization or other debt relief is a developer default.

Section 17.1.2.7 says that there is no cure period in the case of a developer default under 17.1.1.13 except that there are cure periods if the party in bankruptcy is the contractor, a guarantor, or a member of the developer. In those situations, the problem can be fixed. If the developer itself is in bankruptcy, which is what's happened, there is no fix for it.

Section 19.3.1.3 says that a developer default under 17.1.1.13 is a default termination event, giving TxDOT the right to terminate the agreement effective immediately. This is subject to any cure period given in 17.1.2.7, which in the case of bankruptcy by the developer, does not apply.

Section 19.3.3 says that if the developer defaults under 17.1.1.13, no compensation is due as a result of termination of the agreement.

Basically, if the company can't pay its bills, TxDOT's rights are in jeopardy and they have the right to take the road back immediately. The agreement is very favorable to the state. It also states that TxDOT is not liable for the company's debt under any circumstances. This is why the bonds were downgraded to junk status. Repayment is secured only by toll revenue, which ends if the agreement is terminated.