Two Windstream Holdings Inc. creditors have asked a U.S. bankruptcy judge to order the Little Rock company to stop making $54 million monthly lease payments to Uniti Group Inc., a Windstream spinoff.
UMB Bank and U.S. Bank, both nationally chartered banks, have requested a July 26 hearing in a New York bankruptcy court on their motion to halt the payments, which they argue reflect not a lease arrangement but a financing agreement. Such payments would be barred under bankruptcy proceedings.
Windstream Holdings filed for bankruptcy reorganization on Feb. 25, 10 days after losing a lawsuit in federal court.
Given that Windstream is "profoundly insolvent," the payments must be "addressed promptly so that the cash outflow to Uniti can stop," the creditors said in a court filing dated Friday.
Uniti defended the payments, saying they give Windstream access to Uniti's network to serve its customers. "Otherwise [Windstream] will not be able to operate its business," Kenny Gunderman, Uniti's president and chief executive officer, said in a statement Monday.
"This latest effort by out-of-the money junior creditors of Windstream to extract value from Uniti does nothing to change that essential fact," Gunderman said. "Consistent with the views of Windstream's counsel and advisers when the lease was established, we believe that the lease is a true lease and will be respected and enforced as such, and we will vigorously contest any argument to the contrary."
Business on 07/03/2019