FairPoint gets OK to keep paying bills
By DENIS PAISTE
New Hampshire Union Leader Staff
Wednesday, Oct. 28, 2009 Share on Facebook
MANCHESTER – FairPoint Communications won U.S. Bankruptcy Court approval yesterday to continue operating the company and paying its bills a day after filling for reorganization of its debts and protection from creditors under Chapter 11 of the U.S. Bankruptcy Code.
Judge Burton R. Lifland of the U.S. Bankruptcy Court in New York issued a flurry of orders and interim orders yesterday afternoon in response to FairPoint's motions filed with the bankruptcy petition.
"The court approved the motion to continue to pay the employees and benefits and the motion that allows FairPoint to continue its customer programs and things like its wholesale discounts," New Hampshire Associate Attorney General Anne Edwards said. The court also approved orders for FairPoint to pay taxes, fees and insurance.
Burton gave FairPoint an extra 30 days, for a total of 45, to file detailed bankruptcy schedules listing its debts, and sanctioned the consolidation of 79 related corporate filings into one, to be filed under Charlotte, N.C.-based FairPoint Communications Inc.
Representing New Hampshire, Associate Attorney General Richard Head and outside counsel Bruce A. Harwood of Sheehan Phinney Bass + Green, attended an afternoon hearing in Manhattan.
In a telephone interview, Edwards said the state succeeded in getting language added to an order that allows public utility commissions in New Hampshire, Maine and Vermont to continue with their business as usual, except for matters that are clearly preempted by the federal bankruptcy code.
The three states filed a joint objection yesterday morning.
"They can continue on with any activities they have involving FairPoint," Edwards said. "That might include reviewing various actions that FairPoint has been taking under the license agreements to making sure they're in compliance with the license agreements, and things like that."
FairPoint filed Monday with a plan sanctioned by more than half of its bank lenders to cut its debt from $2.7 to $1 billion and reduce tis annual interest payments from $200 million to $65 million.
FairPoint went into bankruptcy without agreement by holders of $570 million in bonds.
For the year ended Dec. 31, 2008, FairPoint had revenues of approximately $1.3 billion, on a consolidated basis.
As of June 30, 2009, FairPoint's unaudited consolidated financial statements reflected assets with a book value totaling approximately $3.236 billion and liabilities totaling approximately $3.234 billion, FairPoint said in the filing.
Yesterday, Fitch Ratings downgraded FairPoint's debt ratings, dropping its Issuer Default Rating (IDR) to D from C.
A hearing on the interim bankruptcy court orders is set for Nov. 18.
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If Fairpoint's business is declining, as the wireline phone becomes obsolete, can't Fairpoint restate the value of its bricks, mortar, equipment assets? I should think a building such as the large red brick Concord street building in Manchester is not worth nearly what it was 10 year ago. Has Fairpoint filed for abatements? And what about depreciation? If new technology leads to your equipment investment becoming obsolete, can't Fairpoint accelerate the depreciation of its investment? It seems to me, as an outsider, this bankruptcy could become very interesting, and far-reaching, once the bankruptcy judge looks at the entirety of how Fairpoint has been doing business.
- Tom, Manchester, NH
Please can we get people on the PUC with valid telecom and business experience, none of which the current appointees have. So many people saw this coming except the people who are paid to do so. While the PUC was screaming about "double poles." some of us were trying to point out that FP's business model was flawed. Because FP offered inferior speeds people would would migrate to Comcast futher erroding the balance sheet of a highly leveraged company and inviting its collapse. The PUC is rather moot now but lets get one for NH future. Appoint people to the PUC who have telecom experience. This role is far too important to leave it in the hand of appointees who do not understand this complex industry.
- Cathy, Derry