Down tourism industry causes privately owned Las Vegas Monorail to file for bankruptcy protection.
The recent down economy has had a huge impact on Las Vegas, and as a result, Las Vegas Monorail filed for Chapter 11 bankruptcy protection on January 13th. The monorail is a very popular transportation system that connects several hotels and resorts to each other and the Las Vegas convention center. The system generates enough revenue to pay its operating costs, but the debt the company has is too much for the company to handle.
At its peak in 2007 the monorail had a passenger count of 7,917,613, with total revenue of $30,252,305. Those numbers fell to 6,005,024 and $26,974,513 in 2009. Of course, the lower revenue has hurt the company.
The monorail is unique in the United States, because it serves as the only mass transportation system that is completely privately owned. As a result, the bankruptcy won’t hurt the city’s credit or bond ratings.
To get a good understanding of just how much debt the company has, you need to take a look at the numbers. The company lists debts between $500 million and $1 billion, and it only lists $10 million to $50 million in assets. A large portion of the debts stems from the construction of an extension of the line that opened in 2004. The line was extended to reach the Sahara hotel, and the total construction and start up costs totaled around $650 million.
The monorail system in Las Vegas is very important the city’s convention traffic and tourism industry, and recently during the Consumer Electronics Show, the line was carried in the neighborhood of 135,000 people in just four days.
As you can see, it is important to Las Vegas and visitors of Las Vegas that the monorail stays open. It is really good for both that the monorail is going to be able to stay open thanks to the Chapter 11 bankruptcy filing. The company is also optimistic that after the reorganization process is completed, that the company can begin to move forward on a $500 million extension to McCarran International Airport. For anyone that has stood in a cab line in Las Vegas, that sounds great.
There is a lot of money involved though, so it is important for the company to get its finances in order before spending a lot more. This is a perfect situation showing the usefulness of the bankruptcy process. The company can’t keep up with its debt payments while remaining operational, so something needs to be done. If the company just closed its doors, everyone would lose, because the company would stop generating revenue. Bankruptcy allows the company to restructure its debts while keeping its revenue stream moving.
Anyway, if you are struggling financially, do something about it. Bankruptcy can help you restructure and wipe out debts, so that you can sleep easier at night. If you would like to find out more about personal bankruptcy, contact a bankruptcy attorney.