NEW YORK (Reuters) - The operator of a South Carolina toll highway sought bankruptcy protection on Thursday in a rare filing by a municipal entity under Chapter 9 of the U.S. Bankruptcy Code.
Connector 2000 Association Inc filed for protection with the U.S. bankruptcy court in Spartanburg, South Carolina, with more than $200 million of bonds outstanding, court records showed.
The nonprofit had been set up in 1996 by the South Carolina Department of Transportation to operate the 16 mile “Southern Connector” toll road in Greenville County, and build an extension to South Carolina Highway 153, records showed.
Revenue, however, fell short of forecasts. According to its website, (www.southernconnector.com), the Piedmont-based entity has in recent weeks collected roughly 12,000 tolls in an average day, compared with the 21,000 it originally expected.
According to court records, Connector 2000 had a $173.3 million deficit at the end of 2009, and defaulted on some bonds in January. Legislation to permit a debt restructuring failed to pass, the records showed.
“The debtor is insolvent,” Connector 2000’s lawyers wrote.
Many municipal entities have in recent months been strained by falling revenue and rising deficits because of difficult economic conditions.
Chapter 9 is a rarely used section of federal bankruptcy law meant to shelter more than 39,000 U.S. counties, cities and towns, and other government entities.
There have been fewer than 500 Chapter 9 filings by local governments in the last 60 years. In 2009, there were 12 such filings out of a total 1.47 million bankruptcies, according to the Administrative Office of the U.S. Courts.
High-profile Chapter 9 petitions include Orange County, California in 1994, and New York City Off-Track Betting Corp in 2009.
The case is In re: Connector 2000 Association Inc, U.S. Bankruptcy Court, District of South Carolina, No. 10-04467.
Reporting by Jonathan Stempel; Additional reporting by Karen Pierog on Chicago
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