Now on to the main event…

For the last decade or so, Brightline, a privately owned railroad company, has been building out passenger service between Miami and Orlando, a 235-mile corridor that is both too far to drive comfortably and too short to fly—the perfect distance, in other words, for an intercity train service in Florida. The concept was the brainchild of Wes Edens, a co-founder of Fortress Investment Group, after the company acquired the Florida East Coast Railway corridor and set out to build a modern train service between the two cities, with stops along the way in Aventura, Boca Raton, Fort Lauderdale, and West Palm Beach. The trip takes about three and a half hours, only somewhat faster than driving. But that’s just one of the reasons Brightline is in trouble.

Ridership in 2025 exceeded 3 million passengers, roughly half the company’s projections in a 2024 bond prospectus. Ridership for the first two months of 2026 was over 562,000, up about 10 percent year over year, with revenue rising 11 percent to nearly $38 million. As best as one can tell, Brightline hasn’t been able to achieve EBITDA positivity, but everyone seems optimistic that EBITDA of some sort is on the horizon for 2026.

Brightline, as they say in the restructuring world, seems to be a case of good company, bad balance sheet. Ridership and financial performance may be off to a better start this year, but the company also has a substantial amount of debt—approximately $6.3 billion of debt and preferred stock spread across a variety of securities, holding companies, and operating companies. Stress is already visible. The company missed its interest payment, due earlier this year, on a $985 million tranche of debt issued by the Florida Development Finance Corporation, then failed to pay the interest during the grace period.

On April 15, a majority of those bondholders agreed to extend the grace period on the interest payment to May 15. Those bonds now trade around 37 cents on the dollar, down sharply from par last summer. Other tranches tell similar stories: Brightline’s $1.1 billion of high-yield taxable bonds, with an 11 percent coupon, are trading around 29 cents on the dollar; uninsured operating debt of $1.1 billion is trading around 67 cents; while $1.1 billion of operating municipal debt insured by Assured Guaranty Ltd. is near par, at 97 cents.

This, of course, is when the financial and legal advisors show up to help design some sort of liability management exercise, or L.M.E., to try to reduce the debt load, hopefully with the help of some of the biggest creditors. Brightline has hired Perella Weinberg Partners to advise on the L.M.E., or whatever the restructuring turns out to be, as well as longtime counsel Skadden Arps. Municipal bondholder creditors have hired GLC Advisors, a restructuring boutique, and the law firm HSF Kramer. The high-yield taxable bondholders, meanwhile, have brought in Evercore and Davis Polk, while the fortunate bondholders at the operating company—fortunate in that their bonds are insured—have hired Lazard and Milbank.

No one is speaking publicly. Ben Porritt, a spokesman for Brightline, declined to comment on the record, as did Perella Weinberg. GLC did not respond to my request for comment about the negotiations between the company and its creditor groups. But the contours here are familiar. Large creditors, including firms like Nuveen and First Eagle Investments, could end up converting some of their debt to equity and perhaps walking off with the company. Fortress could still emerge as an equity holder, depending on how things shake out. If the past is any predictor, an L.M.E. could result in creditors putting in new money in exchange for moving up in the capital structure above creditors who don’t participate in the new funding, as occurred with Saks Global five months before the company filed for bankruptcy. One never knows these days what creditors are capable of when pitted against one another and confronted with a potential financial carcass.

Brightline, for its part, has acknowledged the challenge, explaining in its February 2026 operating report that it continues “to actively pursue the planned issuance of a substantial amount of equity, the proceeds of which would be used to repay principal and interest of existing higher-coupon indirect parent entities’ debt of ours and to increase cash reserves.” The company added that it had used some of its cash reserves to make an interest payment on January 1 for a series of 2024 bonds. “In the meantime,” it continued, “we have been in discussions for the potential incurrence of additional debt,” the net proceeds of which would “be expected to be used to provide liquidity for the company’s ongoing operating requirements.”

However, Brightline cautioned, the terms and conditions of its “existing indebtedness include restrictive covenants that limit our ability to incur debt, and we expect that we may need to obtain consent from certain holders of certain of our and our indirect parent entities’ debt to incur the additional debt.” The company said negotiations to raise new debt or equity, as well as to potentially enter into an L.M.E., were ongoing but may not succeed. “There can be no assurances that we or our indirect parent entities will complete any such transaction on terms that are favorable, at our desired timing, or at all, or that such transactions will be sufficient to meet our or our indirect parent entities’ needs,” the company said.

The ratings agencies have been less circumspect. Fitch downgraded $2.2 billion of Brightline Trains Florida senior secured private activity bonds from B to CCC, as well as $1.1 billion of Brightline East senior secured taxable notes from CCC+ to CC. The downgrades, Fitch wrote, reflect “substantial credit risk and very low margin of safety as liquidity has depleted more quickly than expected since mid-2025, which has elevated default risk by 1H2027.” The agency continued: “Although ridership and revenue have grown year over year, the ramp-up continues to fall short of Fitch’s cases. The addition of new train cars to address capacity constraints has not alleviated concerns that demand will rise sufficiently and quickly enough to drive higher ridership and fare revenue to cover near-term debt service. There remains a high degree of uncertainty around the trajectory of the ramp-up and the timing of cashflow stabilization.”

There are nearer-term concerns as well. Brightline has a $45 million revolver due and payable in May, Fitch noted, adding that the maturity could be extended a year. Failing that, the company “lacks the funds” to pay it off. (I’m told repayment of the revolver won’t be a problem.)

Meanwhile, Fitch wrote, the downgrade of the Brightline East bonds “reflects the heightened probability of very near-term default, with non-payment beginning in January 2027.” Brightline East is “not likely to receive distributions from” the Brightline operating company this year, and so “will have to draw on the remaining ramp-up and prefunded interest reserves to cover near-term financial obligations. However, Fitch believes these reserves will be insufficient to meet the January 2027 debt service payment.”

Brightline East is rated below the operating company, according to Fitch, because “its subordinated position in the cashflow waterfall, greater refinancing risk, and the low likelihood” that the operating company will be able to cover the Brightline East interest payments. Part of the problem, Fitch wrote, stems from the lack of financial information available to investors: “This opacity heightens uncertainty around operating trends and funding plans, and increases the risk of adverse surprises, making transparency a significant driver of the rating.”

S&P Global reached similar conclusions before withdrawing its ratings at the company’s request, noting that Brightline was depleting its cash reserves faster than projected—to as little as $16 million by July—and raising concerns “about the quality of information” provided by the company to the agency. S&P Global sees little to crow about in the company’s near-term financial prospects. “Based on the project’s sustained underperformance, significant cashflow deficits, and deeply distressed debt trading prices, we believe it will likely consider undertaking a distressed exchange or redemption in the next six months,” the agency wrote, forecasting a high likelihood of a “default under our criteria.”

And yet, beneath the stress, there is a functioning business. (Fortress, by the way, is majority owned by Abu Dhabi’s sovereign wealth fund.) Someone close to the Brightline action told me it’s still “relatively early days” in the restructuring process. “Everyone is at the table and trying to work through as consensual a resolution as possible,” this person said. “The underlying operating business continues to grow, month over month, year over year, quarter over quarter. It is performing now better than it ever has. And that is not lost on the counterparties here. The perspective is that the business was funded with a lot of debt, and certainly too much debt for the level of profitability they’re seeing today. But it is a real operating business that just needs a more sustainable capital structure.” And what does a more sustainable capital structure look like? Well, that fight is about to begin.

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