A TROUBLED CHAPTER Chapter 11 Leaves its Mark on the Submarine Telecom Industry by Daniel J Carragher
for the review of detailed financial information about the companies, the deals they cut with their creditors and the infighting between and among competitors, owners and creditors. This article will provide some of the details of three such proceedings, FLAG Telecom, Asia Global Crossing and Pacific Crossing, all of which began in 2002 and all of which have either been confirmed or resulted in sales of substantially all assets.
The depressed state of the undersea cable industry has lead to multiple filings under the U.S. bankruptcy laws by companies caught trying to build out or pay for their networks at the time that pricing and demand for their systems plummeted. The favorable U.S. reorganization laws have been used in conjunction with multinational insolvency proceedings, as Chapter 11 gives companies a unique opportunity to retain control of their business and attempt to reorganize. Chapter 11 also allows the companies to eliminate mountains of debt and emerge unencumbered by the crushing debt that brought them into bankruptcy. The surviving owners, or distressed asset buyers, then have a competitive advantage in the marketplace. The public nature of the proceedings allows
FLAG Telecom FLAG Telecom was a Bermuda company that acted as the holding company for about 50 corporate entities operating a global telecommunications network serving the international wholesale broadband market. Its owned undersea cable network included FLAG Europe-Asia (FEA) Network, FLAG Atlantic-1 (FA-1) Network and FLAG North Asian Loop (FNAL) Network. In addition, FLAG had 15