Florida’s Brightline has filed for bankruptcy protection after years of lower-than-expected revenue left it unable to repay billions it borrowed to finance the Miami-to-Orlando private railroad.
Brightline Holdings LLC and certain other parent entities filed for Chapter 11 on Thursday in New Jersey, listing assets and liabilities of between $1 billion and $10 billion in the petition. The filing excludes Brightline’s operating company, allowing it to continue running trains during the restructuring process.
The Fortress Investment Group-backed company has been skipping interest payments and huddling with creditors for much of the year, looking to garner support across various groups for a plan to restructure its complex $5.5 billion debt stack.
Brightline will get $258 million of post-petition funding from bond insurer Assured Guaranty Ltd. and other investors to see it through bankruptcy. Assured said in a statement that it and other stakeholders had also agreed to provide $490 million of new debt once the company exits the process.
“This new capital will be used to support Brightline Florida’s ongoing operations and help position it for long-term stability and success, in addition to repaying the post-petition financing,” according to Assured, which insures a majority of the existing senior tax-exempt bonds issued by the operating company, BrightLine Trains Florida LLC.
Brightline’s collapse into bankruptcy, while seen as virtually inevitable in recent months, is a setback for billionaire Fortress co-founder Wes Edens, who conceived of the railroad in 2012 with a vision of creating transformative infrastructure.
But even as he pushed ahead with a similar project between Nevada and California, the Florida high-speed passenger system has been on a slow-motion journey to insolvency. It’s a saga that has captivated the municipal-bond market, where Brightline borrowed heavily and where bankruptcies are few and far between.
When it tapped the muni market in 2019 for $1.5 billion to help finance the expansion to Orlando, the company was still loss-making. Months after the 2023 launch of its service between Miami and the Orlando airport, Brightline began slashing ridership forecasts.
In 2024, when the company asked Wall Street for $1.2 billion in junk debt, it opened the door to hedge funds that later sought to seize control of the business through their own restructuring plan.
Brightline made last-ditch efforts at a sale process in recent months under a new slate of management while fielding bankruptcy-loan proposals from the dueling creditor groups.
Under the Chapter 11 plan, Brightline Trains Florida’s $2.2 billion Series 2024 bonds will remain in place during the restructuring, according to a statement from the company. A further $2.2 billion in bonds issued by other associated entities will remain outstanding, with no cut to their principal amounts.
“Today’s agreement brings $490 million in new long-term capital to Brightline from the stakeholders who know this business, and it comes at a time of real momentum,” said Patrick Goddard, chief executive officer of Brightline Florida. “This transaction will be a catalyst for further growth in ridership and revenue.”
Photo: A Brightline train in Miami. Photographer: Eva Marie Uzcategui/Bloomberg
Topics Florida
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