GTT Communications files for Chapter 11 bankruptcy
McLean company expects to operate without interruption
McLean-based telecommunications company GTT Communications Inc. announced this week that the company and some subsidiaries had filed prepackaged Chapter 11 cases.
The close of GTT’s estimated $2.15 billion sale of its infrastructure division to Miami-based I Squared Capital on Sept. 16 allowed GTT to move forward on its bankruptcy cases, which it and some subsidiaries filed in the U.S. Bankruptcy Court for the Southern District of New York. A Chapter 11 filing, or “reorganization” bankruptcy, allows the company to continue to operate its business. GTT’s operations outside the U.S. are not included in the filing and are unaffected.
On Sept. 1, GTT had entered into a risk self assessment (RSA) with stakeholders, including holders of a majority of its secured and unsecured debt and I Squared Capital, to restructure its balance sheet.
The completion of the prepackaged plan, which the cloud networking services provider is aiming to have confirmed in mid-December, and the completed sale of its infrastructure division will reduce GTT’s debt by about $2.8 billion, according to a news release.
“I am pleased by the support we’ve received from our debtholders and other stakeholders demonstrating their confidence in the company’s business plan and long-term strategy,” GTT CEO Ernie Ortega said in a statement. “Following the entry into the RSA, we closed the sale of our infrastructure division, and repaid a significant portion of our secured debt, as we said we would. Commencing the company’s Chapter 11 cases is the next major milestone that enables us to further strengthen our financial position as we continue to operate our business around the world.”
The RSA agreement provides for payment of vendors, employees and other partners for costs incurred in the ordinary course of business, and the company stated that it has sufficient liquidity to operate its businesses.