A bankruptcy judge has given FairPoint Communications Inc. the go-ahead to take its reorganization plan to the next step, a confirmation hearing on May 11.
“I cannot find this plan patently uncomfirmable,” Judge Burton Lifland said on Thursday, according to Bloomberg News.
FairPoint, which filed for Chapter 11 protection last October, proposes to give holders of secured debt 92 percent of shares in the new company and the remaining 8 percent to unsecured creditors. The embattled LEC also intends to convert $1.7 billion in debt to equity and take on a $75 million loan to finance the exit from Chapter 11, Bloomberg reported.
FairPoint went bankrupt after buying Verizon Communications Inc. landlines in Maine, New Hampshire and Vermont in 2008. It has suffered major customer service and billing issues since acquiring those assets, all of which led to insolvency.
And now that it looks to be on the verge of court approval for its reorganization plan, FairPoint is projecting revenue of $1.16 billion for 2010 and $1.21 billion for 2011. The carrier also is forecasting net income of $302.7 million for this year and $413.7 million for next year.