American Roads LLC, the privately owned operator of the international border crossing tunnel that links Detroit to Windsor, Ontario in Canada filed for bankruptcy on Thursday, citing reduced traffic.
The bankruptcy was not the result of last week's petition for bankruptcy by Detroit, although the city's problems contributed to the company's difficulties, Neal Belitsky, American Roads' chief executive, said in court documents.
American Roads is seeking to restructure $830 million in debt. Traffic volumes fell short of projections made in 2006 when it took on its debt, according to court documents.
The company, owned by infrastructure investor Alinda Capital Partners LLC, also indirectly owns four toll roads in Alabama.
American Roads said in court papers that its plan of reorganization was already approved by creditors and that it proposed August 28 as a date for the bankruptcy court in Manhattan to approve its plan.
Under the plan, Syncora Guarantee Inc will become the owner of the company upon its exit from bankruptcy. Syncora insured the company's bond and swap obligations.
American Roads said in court papers it anticipated that most of its low-priority general unsecured creditors will be paid in full.
The company blamed a decline in the population of the Detroit area for the drop in traffic through the Detroit Windsor Tunnel.
Detroit's population has fallen from a peak of 1.8 million in the middle of last century to under 700,000 today.
Detroit sought Chapter 9 bankruptcy protection last week to restructure $18 billion in retiree and bond obligations. The U.S. Bankruptcy Court in Detroit will consider the city's eligibility for bankruptcy next month.
Belitsky, American Roads' CEO, did not immediately return a call for comment.
The case is In Re American Roads LLC, U.S. Bankruptcy Court, Southern District of New York, No. 13-12412.
(Reporting By Tom Hals in Wilmington, Delaware; Editing by Chris Reese)