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Covad Planning For Chapter 11

Posted by ryuzaki0 on from the uh-oh-spaghetti-o dept.

Logic writes: "According to their press release, Covad Communications Group, Inc. is preparing to file for Chapter 11 protection for restructuring. One of the most important points in the release is Covad Communications Group, Inc.'s operating companies, which provide DSL services to customers, are not expected to be included in the court-supervised proceeding and will continue to operate in the ordinary course of business without any court imposed restrictions,' meaning that the operating companies which deal with service providers (such as Speakeasy, who have endorsed Covad's action) will continue to operate unfettered by the court restrictions, and end-user services should be unaffected. Hopefully." As a Speakeasy customer (at home), I sincerely hope that my connection doesn't go away.

3 of 169 comments (clear)

  1. Re:Costs by pci · · Score: 2, Informative

    actually the Baby Bells want DSL. They just don't want to sell it at a loss. It costs over $100/month to have a DSL customer with internet access and a decent level of support. (Reference: http://isp-lists.isp-planet.com/isp-dsl/0107/msg00 046.html)

  2. And don't forget about Rhythms... by Masem · · Score: 4, Informative
    Who filed for Chapter 11 last Thursday (8/2) and are expected to make a decison as to whether to restructure or shutdown/sellout by 8/10. (from Yahoo

    --
    "Pinky, you've left the lens cap of your mind on again." - P&TB
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  3. No really, this is a good thing. by Anonymous Coward · · Score: 1, Informative

    Disclaimer: I work for Covad but these comments are my own opinion.

    Please take the time to read one of the articles such as this that have been written on the subject. Many of the highly moderated comments I have read have it wrong.

    Basically, this is what is called a pre-packaged bankruptcy filing which means that the company and its creditors have agreed on a debt restructuring plan prior to the filing of backruptcy. The backruptcy filing is necessary to expeditiously remove the debt.

    The bottom line is, if things go as planned, Covad comes out of bankrupcy with its customer base intact, without any debt, and only requiring an addional $200 million in funding to become cash flow possitive. The hope is that without the debt overhanging, the balance sheet will be in good enough shape to attract that funding. Best of all, the many Covad customers get to keep their service.

    This is very different than the NorthPoint and Rhythms scenario.