Wholesale service provider Pac-West Telecomm Inc. said on Tuesday it has filed for Chapter 11 bankruptcy.
The company has watched revenue from ISPs continue to decline as it simultaneously has spent millions building out its network. It also sold its retail business to TelePacific Communications in March 2005, eliminating another revenue stream for Pac-West.
Pac-West has secured $18.5 million in debtor-in-possession financing, which will fund operations during reorganization. Pac-West Funding Company LLC, an affiliate of Columbia Ventures Corp., one of Pac-Wests investors, provided the money.
As part of the reorganization, Pac-West had to lay off 94 employees on April 30. Michael Katzenstein, a principal of CXO LLC, a firm that helps turn telecom companies around, said the job cuts were unfortunate but necessary.
Our guiding principles have been, and will be, the importance of providing uninterrupted and high-quality services and of improving the company’s profitability,” said Katzenstein, who is serving as chief restructuring officer.
Pac-West also appointed new officers just before filing for bankruptcy. Wallace Griffin, a former president and CEO for Pac-West and current board chairman, has again taken over as president and CEO. He replaced Hank Carabelli, who also resigned from the board.
Chad Coben has been named interim CFO and Shawn ODonnell as interim COO. Coben replaced Michael Sarina; ODonnell replaced Ravi Brar.
Pac-West has been eyeing bankruptcy and restructuring since late 2006, according to documents filed with the Securities and Exchange Commission in early April 2007. The company also has had to put off filing its annual report, citing unreasonable effort or expense. Further, the company was delisted from the Nasdaq in September 2006 and its common stock moved to the over-the-counter market.
Pac-West is the second competitive carrier this year to go bankrupt; Trinsic Inc., headquartered in Florida, was the first.
Calls to Pac-West were not immediately returned.
Pac-West stock, trading on the OTC Bulletin Board, hovered near its 52-week low of 1 cent after the stock markets close on Tuesday, at 2 cents per share.
Pac-West Telecomm Inc. www.pacwest.com
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