INDIANAPOLIS (AP) — A judge and creditors will have to decide who runs the Indiana Toll Road after the highway’s private operator filed for bankruptcy protection, formally acknowledging that it couldn’t afford the debt from the multibillion deal to take over the highway.
Chicago-based ITR Concession Co. submitted its federal bankruptcy court filing late Sunday. In it, the company said it failed to make a $102 million interest payment that was due in June.
ITR’s debt stems from the 2006 deal pushed by then-Gov. Mitch Daniels under which its parent company, the Spanish-Australian consortium Cintra-Macquarie, paid the state $3.8 billion upfront for a 75-year lease of the 157-mile tollway crossing northern Indiana from Chicago to the Indiana-Ohio state line.
The filing seeking Chapter 11 bankruptcy protection includes the plan ITR announced last week to sell the toll road lease rights to help pay off debts, company ITR spokeswoman Amber Kettring said Monday.
“We have to follow the lease, and it’s still in effect. All the maintenance standards and operational plans that we have are still in effect,” Kettring said. “When, and if, there is a buyer it will still be in effect then as well because the new lease will just transfer to the new operator.”
State officials said they expect no changes in the highway’s daily operations.
“Hoosiers can expect business as usual on the Indiana Toll Road,” Gov. Mike Pence said in a statement.
The Indiana Finance Authority, which oversees the highway lease, anticipated the bankruptcy filing, Pence said. A new operator for the highway must be approved by the finance authority.
“Contingencies to address situations like this were written into the 2006 agreement,” agency Director Kendra York said. “So, day-to-day operations will continue as they have been on this important Indiana roadway, and we’ll continue to monitor the bankruptcy process on behalf of Hoosier taxpayers.”
The lease gives ITR all the highway’s toll revenues, and it is responsible for maintenance and improvement costs.
ITR blamed its financial troubles on the 2008 recession leading to a drop in interstate trucking, a major source of revenue for the highway, according to the bankruptcy filing. The company, however, said the highway’s revenue has gone up 36 percent and operating costs have declined 27 percent since 2007.
The toll charge for cars not using transponders to pay has risen each July since 2008 under a formula included in ITR’s lease agreement. That rate now stands at $9.70 for driving the highway’s full length — up from $4.65, which the state hadn’t increased since 1985. The charge for cars using transponders remains locked at $4.65 until 2016.
ITR and its creditors hope to complete the lease sale by August 2015 and will reorganize its debt if a sale can’t be finalized, according to the bankruptcy filing.