On April 14, 2020, Frontier Communications filed Chapter 11 Bankruptcy. The company currently had $11 billion in unsecured debts, and hoped to reduce that amount by at least $10 billion in the bankruptcy. Unfortunately, Frontier’s Chapter 11 has had a rocky start so far.
What is Chapter 11 Bankruptcy?
There are many chapters of bankruptcy, and Chapter 11 is usually used by large businesses or affluent filers who have considerable debts to restructure. The other chapter businesses have to choose from is Chapter 7, which liquidates unsecured nonpriority debts without repayment. However, the company is required to surrender all its inventory and shut down entirely. Chapter 11 allows the business to remain open while restructuring its debts and protecting the company and its assets from liquidation. The company’s top creditors will form a panel that oversees the company during the bankruptcy. Frontier’s panel accounts for 75% of its debt.
Backlash Over Frontier’s Choice in Adviser
Frontier will be overseen by a panel of its creditors during the bankruptcy, but this panel isn’t meant to serve as Frontier’s bankruptcy adviser. The company hired Evercore Group LLC for the job. The company had already paid Evercore $21.3 million in the 90 days before it filed bankruptcy, and $29.5 million last year. The firm is seeking $16.5 million for the bankruptcy up to this point, and $35 million total if the case is confirmed, payable in monthly installments of $250,000. Unsecured creditors have objected, citing Evercore’s fees as unreasonable compared to other Chapter 11 Bankruptcies. The trustee may end up “clawing back” the $16.5 million Evercore has been paid so far. Evercore may also be deemed ineligible to serve the estate.
Accusations of Dishonesty Regarding Broadband Expansion
Frontier recently claimed in an FCC filing that it has expanded to 17,000 new census blocks since June 2019. These 17,000 census blocks represent internet service for approximately 400,000 Americans. Smaller companies have urged further investigation into these claims, alleging that it is impossible to expand so much while on the verge of bankruptcy. It is important for these claims to be investigated because Frontier is claiming to provide internet service to rural areas that have struggled to get internet connection.
While Frontier has already faced obstacles in its Chapter 11 Bankruptcy, there is still hope on the horizon. Ziply Fiber took over the company’s Northwest operations as a part of it’s parent company’s $1.35 billion deal with Frontier. Frontier can continue to find investors, look for financing, and grow their business all while under the protections of bankruptcy. If you are a small business owner looking to similarly benefit from filing bankruptcy, our office can help. Call to schedule a consultation with one of our experienced professionals and discuss your case in depth. The consultations are free, so there’s no risk to you- call today!
Text Us
