Global Capacity Bankruptcy Notes

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Global Capacity Bankruptcy Notes

Bloomberg has the story on the bankruptcy of Global Capacity.

Global Capacity Files in Delaware for Debt Conversion

Capital Growth Systems Inc., known as Global Capacity, filed a Chapter 11 petition on July 23 in Delaware to convert debt into equity.

The Chicago-based provider of systems to integrate networks had revenue of $64.4 million in 2009, resulting in a $52.8 million net loss including $12.5 million in charges for impairment of goodwill. The first quarter of 2010 resulted in a $2 million loss on revenue of $14.7 million. Revenue in the quarter declined 10 percent from the same period in 2009.

Debt includes $5.2 million on a senior secured loan owing to Pivotal Global Capacity LLC. There is another $38 million on several issues of secured subordinated convertible debt, $4 million in unsecured notes, and $15 million owing to utilities.

The company said in a court filing that there is an agreement on a reorganization plan with Downtown Capital and some debenture holders who also will supply financing for the Chapter 11 case.

The company said it filed in Chapter 11 when out-of-court negotiations over 14 months were "unsuccessful."

The case is In re Global Capacity Holdco LLC, 10-12302, U.S. Bankruptcy Court, District of Delaware (Wilmington).

BTW, the full list of companies involved are as follows: "Global Capacity Holdco, LLC, Global Capacity Group, Inc., 20/20 Technologies, Inc., Centrepath, Inc., Capital Growth Systems, Inc., Global Capacity Direct, LLC (f/k/a Vanco Direct USA, LLC), FNS 2007, Inc. (fka Frontrunner Network Systems, Corp.), Nexvu Technologies, LLC, Capital Growth Acquisition, Inc., and 20/20 Technologies I, LLC. It's never simple in telecom.

List of creditors is here in pdf. They owe a Chicago law firm about $750K.

Fancy talk, but GCG was just a reseller of circuits. At least, that is how I know of them. I was one of their agents. And I'm staring at the BK papers in my hand. GCG owed AT&T $4 million. Cogent, Global Crossing, Level3, BCE, HGC, Qwest, Verizon Business ($2M), XO and Via West were all owed money.

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