Trans National Communications International Inc. (TNCI) told Channel Partners that new requirements from its creditors will push back its timeline to emerge from Chapter 11 bankruptcy by 60 days, from the end of July to the end of September at the earliest.
TNCI President and CEO Brian Twomey said the parties were very close approving the amended reorganization plan in time for the June 13 hearing, but the creditor’s committee and other large creditors asked for a market value test.
While TNCI has had two appraisals since filing for Chapter 11 bankruptcy protection Oct. 9, 2011, the market value test requires TNCI solicit bids from potential buyers. TNCI has hired an investment bank and expects the bidding process to last through mid-August.
If the bidding results in a more attractive proposal than what was submitted in the amended reorganization plan, TNCI and its creditors would need to either revise their reorganization plan or consider a sale of the company, Twomey explained.
A sale, said Twomey, “would not be a good answer for anyone” primarily because companies buying other companies out of bankruptcy typically are looking for a bargain.
Interestingly, however, a sale of the company would be a trigger event for agents participating in the TNCI Agent Equity Plan. Four years ago, TNCI reached an agreement with the Agent Alliance to grant agents an opportunity for an equity stake in the company. Under the plan, calculations of equity and payment values would occur at the time of a transaction.
Coincidently, TNCI has sought and received approval Wednesday from the federal bankruptcy court in Massachusetts on its cash collateral plan, giving it operating funds to run the business through Sept. 28.
TNCI spokesperson Jeanne Duca said this order is key for the company’s agents as it ensure they will continue to be paid through the bankruptcy process. From the beginning, TNCI said it planned to continue to pay agent commissions through the reorganization.
In financial statements filed with the court, TNCI projects 2012 total revenues of $73.3 million. Of its projected $60.2 million in total direct costs, TNCI anticipated that agent commissions will account for nearly $8.3 million in costs. The company listed liabilities of $17.9 million and total assets of nearly $14.7 million as of December 2011.
Citizens Bank of Massachusetts is one of TNCI’s largest secured creditors with a claim of roughly $4.3 million. Some of the company’s largest unsecured creditors include AT&T, Sprint and Qwest Communications (now CenturyLink), which is owed nearly $2 million, according to the initial bankruptcy filing. Sprint is owed more than $5 million while AT&T is owed roughly $1.66 million.
TNCI’s Creditors Committee includes Agent Alliance, Sprint and Verizon.