Windstream Holdings, one of the nation’s largest internet and voice service providers, had filed for a Chapter 1 bankruptcy protection on last Monday.
The filing came following a ruling in last month when a federal court ordered the company to pay $310 million to Aurelius Capital Management in a lawsuit filed by the fund manager alleging the Windstream violated its financial agreement by making a decision in 2015 to spun off its assets into a separate company which led the company to a default on its bond debt.
The decision by Judge Jesse Furman of the Southern District of New York came to be surprising for the Winsdtream as it was not expecting the ruling coming out to be against it on the grounds that at the time of spinoff in 2015, the Aurelius was not the holder of its bond debt.
After considering many options including an appeal against the decision, the board of directors and management team, in order to set off the financial impact of the ruling upon the company as well as its effects on our consumers and businesses, found it to be more appropriate to go for a Chapter 11 protection voluntarily, president and chief executive officer of Windstream Tony Thomas said in a news release.
The company move to go for voluntary bankruptcy filing is to make it sure to have an access to funds to keep its operations running, Thomas said.
On last Thursday, Windstream got a go ahead from the bankruptcy court to continue its business as usual while stepping towards the reorganization under Chapter 11 and also gave the company an access to maximum of $400 million out of its $1 billion in debtor-in-possession (“DIP”) financing.
Thomas said that local operations of the company would not be affected or there should also be no job cuts at local level, according to his commitment to Senator Schumer on Monday.