In June 2018, 139 taxi medallions will be made available to the public at a New York City bankruptcy auction. According to auctioneers, at least 20 of the medallions will be sold.
A valid medallion is required to operate a taxi in New York City. Currently, there are 13,587 taxi medallions in use in cabs throughout the city. Although the iconic yellow taxi cabs are still a popular way for New Yorkers and tourists to get around, many drivers are being pushed out of the market by Uber and other rideshare companies. These taxi drivers are often filing for bankruptcy as a way to recover financially.
How a Bankruptcy Auction Works
When a struggling business owner files for Chapter 11 bankruptcy, the goal is to eliminate as much of his or her business debt as possible. This nearly always involves selling business assets, and this is exactly what happens at a bankruptcy auction.
Bankruptcy auctions are operated by the court system. By auctioning business assets, indebted business owners have the opportunity to get as much money as possible for their assets, since the auction setting creates a competitive atmosphere in which any interested parties can bid on the assets.
Pressure on Taxi Companies from Uber and Other Rideshare Platforms
Times are changing in New York City and in other cities throughout the United States and the rest of the world. When rideshare companies like Lyft and Uber move into a market, they put pressure on the existing taxi services in that market. In nearly all cases, rideshare companies operate much less expensively than traditional taxi services, making it possible for them to offer fare prices that taxi companies simply cannot compete with. This drives taxi driver earnings down and in many cases, it drives them out of business.
In 2013, the average New York taxi driver earned about $45,000 per year. As of 2018, the estimated average annual wage for taxi drivers is $29,000. Taxi medallion prices are dropping, too. In 2013, a medallion could cost more than one million dollars. Today, they cost between $160,000 and $225,000.
Today, there are about 60,000 Uber drivers active on New York City streets at any given time. On average, they earn between $30,000 and $34,000 per year. According to Uber, the majority of NYC uber rides occur in Queens, Staten Island, Brooklyn, and the Bronx.
Work with an Experienced Itasca Bankruptcy Lawyer
Taxi drivers are independent business owners, and when a business struggles financially to the point that its owner cannot recover from debt while turning a profit, sometimes the owner’s only option is to file for Chapter 11 bankruptcy. If you think your business is heading in this direction, contact an experienced bankruptcy lawyer to set up a legal consultation where you can learn more about the bankruptcy process, your rights, and your options as a prospective filer. Contact our team at Newland & Newland, LLP today to get started with us. We serve clients in the Arlington Heights, Palatine, Rolling Meadows, Libertyville, Mundelein, Buffalo Grove, Schaumburg, Elk Grove, and Itasca areas.
(image courtesy of John Cobb)