Bixi Bankruptcy: What Does It Mean for American Bike-Share?

The Montreal-based equipment supplier for several American bike-share systems, including New York's Citi Bike and Chicago's Divvy, filed for bankruptcy protection yesterday. It's unclear exactly how the restructuring or sale of the company known as Bixi will play out, but the bankruptcy filing could accelerate the transition to more robust and reliable hardware and software. It also figures to be a messy process, though the company that operates Citi Bike expressed confidence today that it won't impede their service.

Bixi has always been a strange company. An offshoot of Montreal's municipal parking contractor, it received significant financial backing from the city of Montreal. Bixi both operates bike-share systems in Canadian cities and runs a subsidiary that supplies bikes, stations, and other equipment to bike-share operators in New York, London, Chicago, San Francisco, Boston, DC, and other cities. The subsidiary was supposed to be sold off to disentangle Montreal from Bixi's business ventures, but according to the Times, two deals fell apart and a sale never happened.

The bankruptcy news is not unexpected. It's most troubling for Montreal, which is owed several million dollars by Bixi, and for the other Canadian cities where Bixi runs bike-share systems. In New York and the cities where Bixi is a subcontractor, the restructuring or break-up of Bixi could be a blessing in disguise, helping to resolve some longstanding problems with the company's product.

Until 2012, Bixi's bike-share equipment ran on a software platform developed by 8D Technologies. That's what Bixi was using when it bid on and won the NYC bike-share contract with Alta Bike-Share. But after an intellectual property dispute with 8D, Bixi went to a different firm to develop replacement software, and the systems that have launched since the switch -- including Citi Bike, Divvy, and Bay-Area Bike-Share -- have been plagued by delays, glitches, and inefficiencies. While the software has been updated to some extent, in New York, especially, it's been a drag on operations and an obstacle to system expansion. Both Citi Bike and Divvy, in Chicago, are withholding payments to Bixi because the software is not up to snuff.

It's not clear yet whether Bixi's international operation will be restructured as a financially viable entity, or if it will be broken up. Bixi itself contracted out much of its manufacturing -- including the bikes -- so in the event that the company gets dissolved, American bike-share operators should be able to find suitable replacement suppliers. One company that's potentially waiting in the wings is 8D, which has developed equipment including kiosks, docking units, and locking mechanisms to go along with its software.

Shifting from Bixi to different suppliers would be a challenging transition for bike-share operators, but it could appear seamless from the bike-share subscriber's perspective.

For now, operators supplied by Bixi do not expect the bankruptcy to detract from the customer experience. "We are committed to a thriving and expanded Citi Bike system," said Dani Simons of NYC Bicycle-Share, the subsidiary of Alta Bike-Share that runs Citi Bike. "We're still sorting out the details but we don't expect the news from Montreal to affect our operations in 2014."