Big Taxi Owner’s Public Surrender Of Cabs Is Halted — WSJ

By Katy Stech
Wall Street Journal
August 25, 2016

A bankruptcy judge blocked New York taxi mogul Evgeny “Gene” Freidman from abandoning 46 taxis outside the Citigroup tower in Queens after he threatened a very public surrender to the lender he has battled since 2014.

Bankruptcy Judge Carla Craig on Wednesday told Mr. Freidman and his lawyers, who agreed to surrender the vehicles and their medallions in a dispute over a $34 million unpaid loan, to keep them securely in his possession until further notice.

Earlier this week, Mr. Freidman said he couldn’t refinance his debt to Citibank NA and told the judge he would surrender the medallions, which give drivers of each vehicle the right to pick up street hails in Manhattan’s lucrative central business district.

The surrender marks a turning point for Mr. Freidman, who put dozens of his taxi companies in bankruptcy protection on July 22, 2015, to keep Citibank officials from taking possession of the 46 taxi medallions issued by the New York City Taxi and Limousine Commission and owed by his companies.

Mr. Freidman and his lawyers didn’t respond to emails requesting comment.

Citibank officials said Mr. Freidman’s companies missed a monthly loan payment on Dec. 1, 2014. Mr. Freidman’s lawyers said in earlier court papers that the failure to pay was a bank error and said that Citibank officials betrayed him to try to win business from Uber Technologies Inc., the car-hailing service that has taken some business from taxi drivers. Citibank has denied there was a bank error and Mr. Friedman’s other allegations.

Several traditional taxi companies, including those in major cities like San Francisco and Chicago, have filed for bankruptcy as customers turn to newer ride-hailing services. Chicago’s Yellow Cab taxi service, for example, blamed its financial woes partly on pressure from “on-demand app-based private transportation networks,” bankruptcy-court papers show.

But Mr. Freidman has remained optimistic that traditional taxi companies will continue to profit, as shown in court papers filed in March when he filed a proposal to pay Citibank’s loans with interest over the span of five years.

“The [taxi companies controlled by Mr. Freidman] are confident that the market will rebound and correct and that the medallions will continue to hold their historic value,” his lawyers said in the repayment proposal.

Judge Craig later rejected the repayment plan.

Amid the dispute, Mr. Freidman’s companies agreed to make $159,000 monthly payments, which he failed to do in June, July and August, according to documents filed in U.S. Bankruptcy Court in Brooklyn.

The embattled Mr. Freidman has become the public face of opposition to emerging players in the for-hire vehicle industry. A native of Russia, Mr. Freidman took over his father’s modest taxi business in the mid-1990s and expanded it into one of the New York City’s largest taxi fleets. A company spokesman said in July 2015 that it had 1,800 taxis nationally.

 

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