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Reduced traffic blamed for Detroit tunnel's bankruptcy

Bankruptcy news has touched the city of Detroit, and now it has crossed over to  a tunnel in the city -- specifically, the Detroit-Windsor Tunnel, which connects Detroit to Windsor, Ontario. The U.S. side of the tunnel is operated by a privately-held company called American Roads LLC.

Just a week after Detroit filed for Chapter 9 bankruptcy, the tunnel operator announced its Chapter 11 bankruptcy. Their debt reportedly amounts to $830 million. In late August, the company plans to head to bankruptcy court in Manhattan to approve a plan that will make Syncora Guarantee, Inc. the tunnel's new owner post bankruptcy.

The chief executive for American Roads LLC said Detroit's bankruptcy did not lead to the company's filing, but it also did not help. The main reason, according to the company, is reduced traffic, which is being caused by Detroit's declining population. That number is now under 700,000, a large decline from the middle of last century when it peaked at 1.8 million.

The company, which also owns several toll roads in Alabama, plans to pay most of its "low-priority general unsecured creditors" in full.

Just as any city in Michigan can go through hard financial times, so can its businesses. A Chapter 11 bankruptcy gives a business time to reorganize and plan a way to pay debts, while keeping the business running. In the case of the Detroit-Windsor Tunnel, Michigan residents will be happy to know that the bankruptcy filing will not affect drivers' ability to use the tunnel.

Source: Michiganradio.org, "Detroit-Windsor Tunnel operator files for bankruptcy," July 25, 2013Reuters.com, "Detroit Windsor Tunnel operator files for bankruptcy," Tom Hals, July 25, 2013

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