Windstream Holdings Inc. said on Monday it has filed for bankruptcy protection.
The move by the Little Rock-based rural telecom company to seek protection from its creditors comes after a Feb. 15 ruling by U.S. District Judge Jesse Furman who said Windstream defaulted on some of its bonds in 2015 when it spun off real estate investment trust Uniti Group Inc.
Actions by Windstream subsidiary Windstream Services amounted to a breach of its financial covenants, making Aurelius Capital Management, a New York hedge fund, entitled to a $310 million judgment, Furman said.
Windstream had warned a defeat could lead to bankruptcy or liquidation. The default ruling entitles other creditors to demand immediate repayment on debts they hold.
“Following a comprehensive review of our options, including an appeal, the Board of Directors and management team determined that filing for voluntary Chapter 11 protection is a necessary step to address the financial impact of Judge Furman’s decision and the impact it would have on consumers and businesses across the states in which we operate,” Windstream CEO and president Tony Thomas said in a statement. “Taking this proactive step will ensure that Windstream has access to the capital and resources we need to continue building on Windstream’s strong operational momentum while we engage in constructive discussions with our creditors regarding the terms of a consensual plan of reorganization."
Thomas said the company would, with court approval, "continue paying our employees, maintaining our relationships with our vendors and business partners and serving our customers as usual."
The company last week postponed the release of its quarterly earnings report until as late as March 18.
Read Tuesday's Arkansas Democrat-Gazette for full details.