Taxi Club Management, the national cab company run by self-professed “King of Taxis” Gene Freidman, has been under increased duress since Uber (UBER) and other ride-sharing apps diminished the value of traditional taxi medallions, as first reported by the Observer. Prior to the Mayor’s announcement that he has just backed away from the proposed and controversial “Uber cap” legislation, Mr. Freidman’s company filed for Chapter 11 on 22 of his subsidiary companies.
Mr. Freidman is being sued by CitiBank for allegedly not repaying loans he had taken to finance a number of his medallions. Taxi medallions had reached a peak value of an estimated $1.3 million in 2013, when Uber was in its infancy. That figure now hovers around $750,000, according to the Observer. While Uber’s profitability and ridership continues to grow, taxi magnates like Mr. Freidman have seen the value of their companies plummet.
Mr. Freidman’s spokesman, Ronn Torossian, told the Observer that other medallion owners “will follow shortly,” if banks don’t negotiate and the city government does not impose regulations on Uber and its competitors. In the wake of the Mayor’s about face on the “Uber cap” bill, Ronn Torossian, a spokesperson for The Greater New York Taxi Association (GNYTA), an organization of yellow medallion owners, representing 1800 medallions in New York City said “It’s certainly disappointing that while Uber has legal issues from California to San Antonio, France to Belgium that New York isn’t concerned enough about rules and regulations to insist transportation app companies follow the law.”
Mr. Freidman recently wrote an open letter to the City Council and the Mayor calling on responsibility from regulators. He writes:
“The banks, credit unions and financial companies involved in the medallion industry made millions of dollars as the medallion market flourished. The medallion industry could not have flourished without these lending institutions. It is now time for each of the stakeholders to step up and assist the taxi industry, and to fulfill their individual obligations in the imminent attack on the industry.”
According to Mr. Torossian, the companies will continue to service passengers while bankruptcy measures move forward.
