Dec, 2001 : Covad Emerges From Bankruptcy Robert B. Marks

📅 December 21, 2001 - DSL and broadband access firm Covad Communications (Covad.com) said yesterday it had emerged from bankruptcy after paying bondholders a pre-negotiated amount that eliminated $1.4 billion in high-yield debt.
Last week, the US Bankruptcy Court for the District of Delaware approved a combination of cash and 15% ownership of the company. Covad paid close to $270 million and issued approximately 35 million shares of common stock to its bondholders. An additional 9 million shares of common stock were issued to settle class action lawsuits and other claims regarding the company's reorganization plan, filed on August 15, 2001. The pre-existing shareholders will still retain approximately 80% of Covad. The court-supervised proceedings did not include Covad's operating companies, which provide DSL services to customers and have continued to operate as usual.
Covad was able to recover from bankruptcy partly by immediately going to its creditors and slashing expenses. This has allowed them to recover from chapter 11, which fewer than five percent of telecom companies are able to do.
"Major steps have been completed in the revitalization of Covad," said Charles E. Hoffman, Covad's President and CEO. "A year ago, Covad refocused the company to accommodate the change in capital markets and began reducing expenses. We have now finished restructuring our balance sheet, are fully funded, and essentially debt free. We are focused on refining our business plans to continue to innovate with new services, strengthening our distribution channels, maintaining quality service and financial discipline and keeping the customer at the center of what we do."