FairPoint creditors question motives
Nearly two weeks after FairPoint Communications filed for Chapter 11, its creditors are requesting an investigation into the company's finances and managers.
The creditors have filed a motion at the U.S. Bankruptcy Court in New York City asking for an examiner to be appointed to investigate whether management misrepresented FairPoint's prospects for recovery, according to the Portland Press Herald. The creditors, who are owed more than $550 million, are alleging the company is trying to profit from the proposed restructuring aimed at reducing its debt by $1.7 million. The creditors are also questioning the company's $30 million settlement agreement with Capgemini Group, the consulting firm that installed its computer system responsible for service problems following the takeover of Verizon's landlines, as well as a $23 million dividend paid to shareholders early last year.
According to the filing, the creditors are criticizing the restructuring's proposal that could end up giving top managers up to 10% of the company's equity, or $100 million, in stock options, the Press Herald reported. The creditors also took the company to task for appointing David Hauser as the new chairman and CEO, saying the company should not have tapped one of its own directors with no experience running a telecommunications business.
A hearing on the motion is scheduled for Nov. 18, according to the paper.
Go to the article from the Portland Press Herald >>
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