ISP Windstream Files For Chapter 11 Bankruptcy After Being Hit With $310 Million Judgement (arkansasbusiness.com) 39
bbsguru writes: Windstream Holdings Inc. of Arkansas filed for Chapter 11 bankruptcy on Monday, less than two weeks after a federal court judge found that the 2015 spinoff of its fiber and copper assets into a separate company ran afoul of bond covenants, exposing the company to a $310 million judgment. Windstream, a spinoff of the old Alltel Corp. of Arkansas, reported $5.8 billion in revenue in 2017. It employs about 13,000 companywide. CEO Tony Thomas said in a press release that the reorganization is "a necessary step to address the financial impact" of the judge's decision and "the impact it would have on consumers and businesses across the states in which we operate."
"Taking this proactive step will ensure that Windstream has access to the capital and resources we need to continue building on Windstream's strong operational momentum while we engage in constructive discussions with our creditors regarding the terms of a consensual plan of reorganization," Thomas said. "We acted decisively to secure the long-term financial stability of Windstream, and we are confident that, upon completion of the reorganization process, we will be even better positioned to invest in our business, expand our speed and capabilities for our customers and compete for the long term." A court approval of a reorganization plan will allow the company to continue paying its employees and maintain relationships with vendors, business partners and customers, Thomas said.
"Taking this proactive step will ensure that Windstream has access to the capital and resources we need to continue building on Windstream's strong operational momentum while we engage in constructive discussions with our creditors regarding the terms of a consensual plan of reorganization," Thomas said. "We acted decisively to secure the long-term financial stability of Windstream, and we are confident that, upon completion of the reorganization process, we will be even better positioned to invest in our business, expand our speed and capabilities for our customers and compete for the long term." A court approval of a reorganization plan will allow the company to continue paying its employees and maintain relationships with vendors, business partners and customers, Thomas said.
Here, LMFTFY (Score:1)
"Taking this proactive step will ensure that Windstream has access to the capital and resources we need by sticking it to bondholders inspite of the federal judgment."
Chapter 11 in this case is simply an appeal of the decision they can't lose.
Re: (Score:2)
The art of the bankruptcy:
"What I've done is I've used, brilliantly, the laws of the country. And not personally, just corporate. And if you look at people like myself that are at the highest levels of business, they use -- many of them have done it, many times..."
Spun off and at best broke even in 2015 (Score:4, Insightful)
Common practice to bundle up a bunch of your marginal businesses, spin them off, they break even more or less for a few years, burn through their credit lines and then go into bankruptcy when the first large round of debt is due.
Article summary should read:
Windstream, a marginal business spun off from Allitel, limped along for a few and then slipped into bankruptcy.
Simply look at the financials and you'll see they have owed > 4 billion in debt since being spun off.
Check the bond ratings and the spread of bonds traded vs us treasuries to see how risky the bond market gauges the company.
Not really a surprise the bankruptcy.
Re: (Score:2)
What I don't understand is why bank lend money to such companies. Either the banks are incompetent or colluding, or perhaps that, notwithstanding the news of such events, this type of bankruptcy happens rarely.
Re: (Score:2)
What I don't understand is why bank lend money to such companies.
Lenders don't lend money under the expectation that they'll get all of it back. That's what interest is for: it's the cost of the money. One of the costs of lending is covering defaulting loans. If the lender did their job right, the interest rate they accepted on the debt is commensurate with their risk, based on the financials of the business and the faith in management.
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Lenders don't lend money under the expectation that they'll get all of it back. That's what interest is for: it's the cost of the money.
Interest is the cost of the money, but lenders would still charge interest even if they expected to get it all back. While a portion of the interest is based on the risk of default, most of it is simply time preference: money one can spend now is worth more (has a higher net present value) than the same amount of money at some future time.
So...? (Score:2)
They were caught doing shady things, and so to avoid the consequences they'll just declare bankruptcy? Hopefully the new judge will be a little skeptical of this.
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Bankruptcy shields them from legal payments just like any other creditor.
It's why suing a company for some huge verdict they can't pay is quite stupid, they just declare bankruptcy and the person that won the verdict goes into the unsecured creditor pool like anyone else where they will get pennies on the dollar if they are lucky.
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Before or after matters not.
They get in line with the unsecured creditors. Might be at the front of the list but definitely not in the secured creditor group.
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Not necessarily [uscourts.gov].
"Not all debts are discharged. The debts discharged vary under each chapter of the Bankruptcy Code. . . . The most common types of nondischargeable debts are certain types of tax claims, debts not set forth by the debtor on the lists and schedules the debtor must file with the court, debts for spousal or child support or alimony, debts for willful and malicious injuries to person or property, debts to governmenta
Re: (Score:2)
They tried to shield assets from bond holders with an illegal asset divestiture right before declaring bankruptcy. It was properly struck down, the end result it what should have happened to begin with, a proper bankruptcy including the original assets.
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It is not called shielding assets, they as directors of corporation attempted to STEAL assets from their creditors by pushing those assets into another company they controlled, they should be criminally prosecuted.
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Yeah limping away to prepare his golden parachute.
Worse Customer Service for Windstream Customers (Score:1)
This will probably result in customer service for Windstream customers getting worse--and it is already bad.
Re:Confused (Score:4, Informative)
2015 spinoff ran afoul of bond covenants (Score:2)
So was CEO Tony Thomas the CEO back in 2015? If so, why is he still there? Or why is the legal team responsible for this still there? Or have they all already "done their duty" and left to spread More Joy and Happiness wherever they go?
Legacy rural telecom provider -- dead man walking (Score:2)
It's better than that (Score:4, Interesting)
Alltel bought, stripped and dumped a company called Systematics back in the 90's. Mostly because they were desperate to get a grip on the then new booming cell phone market and had no real system capable of handling the tracking and billing. Buying a company that did contract services for banks was the closest they could get. It worked. They got a billing system created, spun off some healthcare software and screwed the employees by selling the rest over to Fiserv. Much $$$ for the board. They later went private, spun the legacy deadweight landlines off into Windstream and then screwed over some more folks by selling to Verizon wireless. And yet again more $$$ for the board w no regard for the viability of the surviving bad smell that was left of the firm. That Windstream still existed was surprising.