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Blue Casa-TNCI Deal Closes, But Agent Issues Remain Open

By Khali Henderson
May 01, 2013 - News

**Editor's Note: Please click here for a recap of the biggest channel-impacting mergers in Q1 2013. **

Blue Casa Telephone LLC, a provider of residential and business telephone services in California, on Tuesday closed its acquisition of bankrupt telecom reseller Trans National Communications International Inc. (TNCI). The acquired company will continue to operate under the TNCI brand.

The federal bankruptcy court in Massachusetts approved TNCI's asset purchase agreement (APA) with Blue Casa, Santa Barbara, Calif., March 14. TNCI filed for Chapter 11 bankruptcy protection, Oct. 9, 2011, and had expected to emerge from bankruptcy in spring 2012, but negotiations with the creditors stalled, and by summer, the companies were moving forward with the bankruptcy sales process.

The completed transaction does not end what has proven to be long process for TNCI's agent channel on two fronts – the fate of their agency agreements and the resolution of their claims as unsecured creditors.

Agent Agreements

A spokesperson for Blue Casa/TNCI told Channel Partners that "TNCI has worked to get many agent agreements completed with existing agents and is working to sign even more agents." The spokesperson estimated that Blue Casa/TNCI had signed agreements with agents representing "more than half" of its customer base.

The spokesperson did not reveal details of those agreements, but said Blue Casa/TNCI has "worked out a way for our signed agent partners to retain their residual commission and position the company for growth." The agreements do contain "performance and efforts commitments," the spokesperson said.

In addition, the spokesperson said, "TNCI is also looking for new agents to partner with for our future growth plans. TNCI is committed to serving its existing and new customers, and looks forward to a new era of strategic growth."

One of TNCI's largest partners, the Agent Alliance, tells a different story. While Blue Casa's statements to the media indicate support for the agent channel, Agent Alliance CEO Bill Power told Channel Partners "the company's behavior does not support that."

The consortia of agencies in March filed a motion to compel Blue Casa/TNCI to accept or reject its agreement upon the initial close of the transaction. Power said because Blue Casa/TNCI had not accepted the contract by the transaction close on Tuesday, it is considered rejected and none of its provisions, including any non-solicitation clauses, are enforceable. In other words, Agent Alliance members can move their customers to other carriers, Power explained.

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