Focal Communications Corp. has achieved an essential milestone in its bid to emerge from bankruptcy this summer. A federal bankruptcy court on Thursday approved its plan of reorganization, the Chicago-based telephone and data provider said.
Focal says it anticipates emerging from bankruptcy “within the next few weeks.”
The company filed for bankruptcy court protection in December, listing $561 million in total liabilities and stockholder equity at the end of the third quarter 2002.
The reorganization plan, which Focal filed in March, would abolish about $375 million in debt, leaving Focal with telecommunications assets in 23 markets stretching from Boston to Seattle.
Under the reorganization plan, senior secured noteholders – including the venture capital firms that first backed the company - and unsecured creditors would exchange their debt for a stake in the company. Senior noteholders would control an 85 percent stake in the company with unsecured creditors holding a 15 interest. Senior noteholders also would have a controlling interest on the nine-member board of directors.
According to the disclosure statement dated April 30, Focal owed its bank group $78 million. Focal paid the bank group $15 million as part of its prenegotiated Chapter 11 bankruptcy filing.
