Australia’s Connector Motorways, which owns and operates Lane Cove Tunnel and the Military Road E-Ramp in Sydney, has gone into receivership.

KordaMentha has been appointed the receiver and manager and will take control of the 3.6km Lane Cove Tunnel, which was built at a cost of A$1.6bn to connect the M2 tollway in Sydney’s northwest with its northern suburbs.

Connector has accumulated debts of nearly A$1.16bn, mainly as a result of passenger traffic not meeting estimates.

Between 55,000 and 60,000 people use the tunnel daily, compared with the 100,000 estimated initially.

KordaMentha partner Martin Madden said the company will be working to assess the best option for the tunnel’s future, which may include a sale.

“Operationally, the tunnel and E-ramp are performing well, with patronage having increased by almost 9% over the past 12 months ending December 2009,” Madden said.

“We do not intend to make any significant operational change.”

Connector Motorways was founded in 2003 to build and operate the toll roads until 2037 and included Leighton Holdings, Mirvac Group and Hong Kong’s Cheung Kong.

The three groups have already written off their holdings in the company.