Windstream Files for Bankruptcy Protection

Telecommunications company Windstream has filed for Chapter 11 bankruptcy protection.

The Company filed bankruptcy Monday in the Southern District of New York..

Windstream’s decision to file for bankruptcy protection comes after a New York Judge ruled February 15, that Windstream Services, LLC’s 2015 spinoff of certain telecommunications network assets into a real estate investment trust violated its agreements with bondholders.

The bankruptcy filing includes all of Windstream’s subsidiaries, including Windstream Georgia, which is based in Dalton, Georgia.

The decision to file bankruptcy, according to a press release issued Monday, arose from challenges by Aurelius Capital Management (“Aurelius”) and U.S. Bank National Association that the spinoff was invalid under the terms of those agreements.

“Windstream strongly disagrees with Judge Furman’s decision,” Thomas said. “The Company believes that Aurelius engaged in predatory market manipulation to advance its own financial position through credit default swaps at the expense of many thousands of shareholders, lenders, employees, customers, vendors and business partners. Windstream stands by its decision to defend itself and try to block Aurelius’ tactics in court. The time is well-past for regulators to carefully examine the ramifications of an unregulated credit default swap marketplace.

Thomas went on to say Windstream’s Board of Directors chose to file for bankruptcy protection in order to secure necessary long-term funding.

“Following a comprehensive review of our options, including an appeal, the Board of Directors and management team determined that filing for voluntary Chapter 11 protection is a necessary step to address the financial impact of Judge Furman’s decision and the impact it would have on consumers and businesses across the states in which we operate,” said Thomas. “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. 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.

“Windstream did not arrive in Chapter 11 due to operational failures and currently does not anticipate the need to restructure material operations,” Thomas continued. “While it is unfortunate that Aurelius engaged in these tactics to advance its returns at the expense of Windstream, we look forward to working through the financial restructuring process to secure a sustainable capital structure so we can maintain our strong operational performance and continue serving our customers for many years to come.”

Thomas said Windstream has received a commitment from Citigroup Global Markets Inc. for $1 billion in debtor-in-possession financing to keep operating.

In conjunction with the filing, the Company has filed a number of customary first day motions, according to the press release. The motions will allow the Company to continue to operate in the normal course of business without interruption or disruption to its relationships with its customers, vendors, channel partners and employees.

“Following approval by the Court, this financing, combined with access to the cash generated by the Company’s ongoing operations, will be available to meet Windstream’s operational needs and continue operating its business as usual,” he said.

Windstream has come under fire by consumers in North Georgia for its poor telephone service and slow Internet service.

In 2014, Windstream agreed to pay $2.5 million to resolve an investigation by the Federal Communications Commission’s Enforcement Bureau into the company’s rural call completion practices.

It also settled a lawsuit in the amount of $600,000 brought by the Georgia Department of Consumer Affairs over allegations of false advertising regarding their Internet speeds.

And in 2016, 9th District U.S. Representative Doug Collins called for a Congressional oversight committee to find out why Windstream Communications has provided such poor service to customers in Northeast Georgia.

In May of 2016, Collins met with Thomas to discuss the Company’s plans to improve and upgrade phone and Internet service to Northeast Georgia customers.

In 2017, a class action suit was filed against Windstream for its poor Internet Service.

And last month, Rep. Collins introduced the Connect America Fund (CAF) Accountability Act of 2019, to hold providers like Windstream accountable.

More information and resources for customers, vendors and other stakeholders on Windstream’s bankruptcy filing as well as other information on Windstream’s filings, can be accessed by visiting Windstream’s restructuring website at Windstream Restructuring.