Monday, October 02, 2017
Here at Shenwick & Associates, our practice involving debtors with “underwater” taxi medallions is growing by the day, so we pay close attention to the latest developments in the area. On September 25th, the New York City Council Committee on Transportation held a hearing that was attended by several dozen medallion owners pleading for relief from the decline in medallion values. As we previously blogged, at an auction earlier this month, 46 medallions sold for under $200K each. The New York Post article about the hearing mentions William and Gloria Guerra, who purchased a medallion in 1984 for $86K and hoped to fund their retirement to sell it. Instead, they’ll break even or suffer a slight loss in inflation adjusted dollars.
The Transportation Committee indicated that it’s considering several measures to help the industry, including:
· Creating a task force and a six-month study of how ride share services are impacting taxis;
· Capping the total number of cars operated by ride share services (an idea originally proposed by Mayor De Blasio in 2015, which was abandoned after Uber strongly campaigned against it);
· A bailout fund for medallion owners funded by a surcharge on livery cars;
· Allowing each medallion to cover two taxis instead of one; and
· Relaxing disabled access requirements.
The Transportation Committee hasn’t taken any action yet, and may be deterred from limiting the growth of ride share services due to advocacy from their drivers and lobbying firms. For more information about this developing area of debtor/creditor and bankruptcy law, please contact Jim Shenwick.
Wednesday, September 20, 2017
Crain’s New York recently reported that based upon a bankruptcy filing by a company (Hypnotic Taxi LLC) owned by Evgeny “Gene” Friedman, an auction held September 18th, 2017 the answer is about $186,000 . Maltz Auctions was the auctioneer, at the LaGuardia Marriott Hotel, of 46 medallions that were assets of the bankruptcy estate in In re Hypnotic Taxi LLC. This case involved medallion owner Evgeny “Gene” Friedman, who once owned 800 medallions, resulting from a foreclosure by Citibank and tax fraud charges
With the 6% buyer premium owed to Maltz, the purchase price was about $198,000 per medallion or $9.1M in total for all 46 medallions.
According to Crain’s New York, the winning bidder was out of state hedge fund MGPE, Inc. A hearing to confirm the results of the sale will be held in the U.S. Bankruptcy Court for the Eastern District of New York on September 25th. Accordingly, based on the auction results for the 46 medallions at the Maltz auction, the value of medallions appears to be $198,000. The banks that have financed NYC medallions may argue that one auction (albeit of 46 medallions) is not the indicator of true value, others may argue that yesterday’s auction results are a true indicator of medallion value. Jim Shenwick.
Tuesday, September 19, 2017
Here at Shenwick & Associates, we are continuing to monitor litigation regarding the taxi medallion industry. Earlier this year, the Taxi Medallion Owner Driver Association (TMODA) along with credit unions that invested in taxi medallions and other plaintiffs commenced an action in the U.S. District Court for the Southern District of New York (federal court) against New York City and the Taxi and Limousine Commission (TLC), claiming that the TLC’s rules deny taxi drivers equal protection and due process because Uber and Lyft drivers aren’t required to comply with the same TLC regulations as medallion owners. That action was dismissed in March, finding that the difference between taxis and alternative services justified the differences in the rules. That case has been appealed to the Second Circuit Court of Appeals and scheduled for argument on October 24th, 2017.
In April, the TMODA sent a letter to Governor Cuomo asking for a moratorium on medallion foreclosures. In May, the TMODA filed an Article 78 proceeding in New York County Supreme Court (which included two taxi drivers as co–plaintiffs), seeking to compel the TLC “to establish and enforce standards to ensure . . . yellow medallion taxicabs, are and remain financially stable.” A hearing in that special proceeding will be held on October 24th, 2017.
We will continue to monitor taxi medallion litigation and provide readers of our e-mails and blog with updates. If you have an underwater medallion or other debtor and creditor and bankruptcy questions, please contact Jim Shenwick.